```

[Senate Hearing 111-712]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 111-712
 
                           ELECTRIC VEHICLES

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                                   TO

  RECEIVE TESTIMONY ON POLICIES TO REDUCE OIL CONSUMPTION THROUGH THE 
  PROMOTION OF ACCELERATED DEPLOYMENT OF ELECTRIC-DRIVE VEHICLES, AS 
    PROPOSED IN S. 3495, THE PROMOTING ELECTRIC VEHICLES ACT OF 2010

                               __________

                             JUNE 22, 2010

                       Printed for the use of the
               Committee on Energy and Natural Resources

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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

BYRON L. DORGAN, North Dakota        LISA MURKOWSKI, Alaska
RON WYDEN, Oregon                    RICHARD BURR, North Carolina
TIM JOHNSON, South Dakota            JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana          SAM BROWNBACK, Kansas
MARIA CANTWELL, Washington           JAMES E. RISCH, Idaho
ROBERT MENENDEZ, New Jersey          JOHN McCAIN, Arizona
BLANCHE L. LINCOLN, Arkansas         ROBERT F. BENNETT, Utah
BERNARD SANDERS, Vermont             JIM BUNNING, Kentucky
EVAN BAYH, Indiana                   JEFF SESSIONS, Alabama
DEBBIE STABENOW, Michigan            BOB CORKER, Tennessee
MARK UDALL, Colorado
JEANNE SHAHEEN, New Hampshire

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
               McKie Campbell, Republican Staff Director
               Karen K. Billups, Republican Chief Counsel

                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Bingaman, Hon. Jeff, U.S. Senator From New Mexico................     1
Clay, Kathryn, Ph.D., Director of Research, Alliance of 
  Automobile Manufacturers.......................................    25
Crane, Alan T., Senior Program Officer, National Research Council    41
Dorgan, Hon. Byron, U.S. Senator From North Dakota...............     4
Friedman, David, Research Director and Senior Engineer, Union of 
  Concerned Scientists, Oviedo, FL...............................    36
Murkowski, Hon. Lisa, U.S. Senator From Alaska...................     3
Sandalow, David B., Assistant Secretary, Policy and International 
  Affairs, Department of Energy..................................     6
Smith, Frederick W., Chairman, President and CEO, Fedex 
  Corporation, Co-Chairman, Energy Security Leadership Council, 
  and Member, Electrification Coalition..........................    18
Wynne, Brian P., President, Electric Drive Transportation 
  Association....................................................    32

                                APPENDIX

Responses to additional questions................................    57

                           ELECTRIC VEHICLES

                              ----------                              

                         TUESDAY, JUNE 22, 2010

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:04 a.m. in 
room SD-366, Dirksen Senate Office Building, Hon. Jeff 
Bingaman, chairman, presiding.

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW 
                             MEXICO

    The Chairman. OK. We will go ahead and start the hearing.
    Thank you all for coming.
    Today we are looking into the issue of how to accelerate 
deployment of electric vehicles and specifically how the bill 
Senator Dorgan and others have introduced on this subject fits 
into a broader policy framework on this.
    This has been a subject of great interest here in the 
committee and in the full Senate and will continue to be 
important as we look to reduce our oil dependency and 
greenhouse gas emissions from the transportation sector.
    The significant benefit of using electricity to fully or 
partially power our vehicles, when it comes to oil security, is 
easy to see. Vehicles can achieve efficiencies of well over 100 
miles per gallon, save consumers money in the process. The 
manmade disaster unfolding in the Gulf provides an obvious 
reason to reduce our reliance on oil.
    But there are other significant environmental benefits of 
electrification as well, and as we bring more renewable sources 
into our electricity supply through market mechanisms such as a 
renewable electricity standard that we have got in the bill we 
have reported out of this committee or by directly pricing 
carbon pollution, we can multiple the benefits by using that 
sustainable power in our transportation sector as well.
    This committee has previously supported research into the 
technologies found in these vehicles, as well as deployment 
programs such as the Advanced Technology Vehicles Loan Program, 
which supports the reopening or retooling of plants to produce 
electric vehicles in Tennessee and in Delaware and in 
California. Grant programs to support deployment are allowing 
plants to be built to produce next generation batteries in 
States such as Michigan and Indiana, and federally supported 
pilot programs to demonstrate the vehicles are beginning in 
several States.
    However, to really achieve energy and environmental 
security gains, the country clearly needs and the manufacturers 
of the technology have to see a substantial market for these 
vehicles in order to justify their investments. First, it will 
require infrastructure in communities that will give consumers 
the confidence that electric vehicles will meet their needs. 
Second, consumers must be able to afford the early vehicles 
before manufacturers have achieved economies of scale and 
technology advances have reduced the costs of production. 
Senator Dorgan's bill contains a number of programs aimed at 
addressing both of these problems.
    I should note that this bill is also a companion to a 
fuller bill that Senator Dorgan has proposed containing 
complementary tax provisions. That bill has gone to the Finance 
Committee.
    There is a bill that I have introduced with Senator Snowe, 
S. 1620, that is similarly aimed at allowing consumers to 
realize the benefits of more efficient vehicles through a 
rebate at the point of purchase. I believe making the benefits 
of efficiency, as well as the costs of inefficiency, more 
visible to consumers at the time that they purchase a vehicle 
is an important part of the equation that the Senate will have 
to return to when it considers these policies.
    [The prepared statement of Senator Landrieu follows:]

    Prepared Statement of Hon. Mary L. Landrieu, U.S. Senator From 
                               Louisiana

    Thank you, Mr. Chairman for holding this important hearing today. I 
have always been a supporter of alternative, more-efficient and less 
carbon-intense vehicles, and I think this discussion comes at an 
important time.
    Our country, and in particular my state of Louisiana, is reeling 
from the impacts of what supplying our country with oil, mainly for our 
cars, can result in. Everyone knows I am a staunch supporter of the 
domestic oil industry, because as Americans we rely on this energy in 
our everyday lives--from driving our cars to work or helping to make 
consumer goods. I believe that if we are going to consume petroleum 
products, we must and can produce it safely at home.
    I also believe that the risks--both environmental and 
geopolitical--are too high when we import oil from foreign sources.
    However, as a country, we consume 20 million barrels of oil a day, 
importing more than half of that. While to some it is a laudable goal 
to end oil consumption immediately, this is not reality as our economy 
runs on oil. Without oil, most of us would not have been able to drive 
to work this morning. As such, it begs the question, how is the 
transportation sector going to survive without petroleum? If as a 
country we are going to reduce our dependence on foreign oil and begin 
to move away from petroleum transportation fuels, then we must get 
serious about implementing new technologies.
    In the immediate future, we can promote more fuel efficient cars, 
such as the car being manufactured by the V-Vehicle Company. This car 
still has an internal combustion engine, but it gets nearly double the 
miles per gallon than current commercially available cars. In addition, 
it's affordable and the technology is available so it can be 
manufactured immediately.
    More fuel efficient cars like the V-Vehicle model, are the current 
biggest bang for our buck as we wait for future technologies to become 
commercially available.
    However, in the long-term, we must look past petroleum-fueled cars 
and instead look to alternative non-petroleum vehicles. In the future, 
one technology that holds a lot of promise is the plug-in electric 
vehicle. Electric vehicles can have several benefits to consumers 
including costing pennies to refuel per mile and having zero tailpipe 
emissions.
    U.S. manufacturers are currently ramping up their capacity to 
produce electric vehicles, going from 50,000 plug-in electric vehicles 
batteries by the end of 2011, to more than 500,000 by December 2014.
    However, this technology still has some kinks that need to be 
addressed. There are several areas that I have concerns with including: 
1) Can these vehicles be economically affordable for the average 
American in the near future, and if not, should we invest in a more 
promising technology? 2) What will the added load on the grid mean to 
our already feeble transmission infrastructure? 3) How will Americans 
dispose of the batteries and what impact will this have on our 
environment?
    Regardless, no technology is perfect overnight and it will take 
ongoing research and development if we are going to make plug-in 
electric cars a reality. I believe that this is a worthy task the 
Federal government should support as it will be critical as we push 
this country toward a more energy secure future.
    Thank you.

    The Chairman. Let me call on Senator Murkowski for her 
comments, and then I also want to give Senator Dorgan a chance 
to make a statement since he is the prime sponsor on this bill.
    Senator Murkowski.

        STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Thank you, Mr. Chairman. I appreciate 
the hearing this morning. I know that there is a great deal of 
interest in it, the issue itself. It is reflected here in the 
hearing room this morning, and out in the hallway, we have got 
a full crowd out there. So clearly an issue of great interest.
    This legislation that would promote electric vehicles 
through a number of new plans and programs, significantly 
increase the Federal support for everything from the charging 
stations to the basic R&D.
    I think all of us on this committee would agree that 
electric vehicles have great promise, great potential, and all 
of us want to see them take off and transform the auto 
industry.
    We are very excited about the Nissan Leaf, Chevy Volt, and 
we are equally excited about the vehicles that will shortly 
follow, including those from new companies like Tesla and 
Fisker.
    As we look for ways to increase our energy security, 
decrease the cost of energy and create new jobs, electric 
vehicles offer a unique opportunity to make progress on all 
three of these fronts at once.
    So I would also like to commend Senator Dorgan for crafting 
some new policies beyond the tax credits and the subsidies that 
the Government already offers that could hasten their 
deployment.
    I think there is a great deal to like in this bill. I think 
you will see reflected in my questions, though, that I do have 
a couple concerns. As I say, those will be reflected in the 
questions.
    One is about whether or not we are perhaps tipping the 
playing field to advantage a technology that I think has 
certainly captured our attention and appropriately so. This is 
not new. In the Clinton administration, it was diesel hybrids 
that we were focused on. In the Bush administration, it was 
hydrogen and fuel cells. For the past several years, the focus 
has been on plug-in hybrids.
    I am as hopeful as anyone that electric vehicles are here 
to stay, but I think we recognize, particularly in this 
committee, that sometimes when we try to pick the winners and 
losers, we do not do a very good job of it. So the question is, 
are we finally right? Even if we are, would it still be better 
to adopt an approach that promotes technologies equally and 
requires them to compete against one another? I think it is a 
fair question and one for good discussion.
    I also raise the issue about the spending. I understand 
certainly that authorizations are different than the 
appropriations and that any tax credits added to this bill are 
likely to be offset. But I think we do look at the price tag 
with a little bit of raised eyebrows. $4 billion to $6 billion 
is a lot. That is certainly out there on the table as we 
consider that.
    But I am pleased that we have this before the committee and 
can have an opportunity to learn a little bit more about it.
    Again, Mr. Chairman, thank you for holding the hearing and 
to you, Senator Dorgan, for your leadership on this.
    The Chairman. Senator Dorgan, did you want to make an 
opening statement?

 STATEMENT OF HON. BYRON DORGAN, U.S. SENATOR FROM NORTH DAKOTA

    Senator Dorgan. Mr. Chairman, I would and thank you for the 
courtesy.
    I along with Senator Alexander, and Senator Merkley have 
worked on this legislation for some while. We have introduced 
several versions, one that includes tax credits. That, of 
course, goes to the Finance Committee. The bill we're 
considering today has been referred to this committee.
    Let me make a couple of comments and I will finish 
commenting on this issue of picking winners and losers.
    I believe it was in the World's Fair in 1900 when Rudolph 
Diesel showed up. He had a new engine that would run on 
vegetable oil. A few years later, President Taft decided to get 
rid of horses at the White House and buy some cars. Among the 
cars he bought was the Baker electric car. So back a century 
ago, we were talking about a new engine that would run on 
vegetable oil and an electric car at the White House. Then a 
few years after that, Henry Ford developed the Model T and 
selected gasoline to run the internal combustion engine.
    This Congress, in 1916, as a result to Henry Ford's 
decision, said to the American people, if you are out looking 
for oil and gas, God bless you. We want to incentivize you to 
do that, talking about picking winners and losers. We would 
like to give you very significant tax benefits if you go out 
looking for oil and gas. That was almost a century ago and it 
continues today because Congress decided that is was what we 
wanted to do in this country.
    Now, the dilemma is that we use 25 percent of all the oil 
that we suck out of the planet every single day; meanwhile, we 
makeup only 10 percent of the population and possess only 3 
percent of the known oil reserves. A lot of people, myself 
included, believe that our need for oil will lead to very 
vulnerable circumstances for the country's future.
    We import between 12 million and 13 million barrels of oil 
a day and 70 percent of the oil that we use in our country, 
both imported and domestically produced, is used in the 
transportation sector.
    So when you think about what is ahead of us, you have to 
consider what different approaches we might use with respect to 
transportation.
    Now, I happen to support virtually all new approaches to 
transportation. Last year, the administration cut $190 million 
from hydrogen fuel cell research. I put the money all back in 
the subcommittee that I chair on appropriations. Why? Because I 
believe that in the longer term hydrogen fuel cells are going 
to be very important.
    But with respect to plug-in hybrids and electric vehicles, 
the question is do we want to begin to incentivize different 
approaches to moving our transportation fleet. I believe the 
answer is yes. We have come up with an approach that says, with 
respect to electric vehicles, let us develop a series of 
incentives to further battery technology. We would like to see 
somebody come up with a 400-mile to 500-mile battery. We set up 
deployment communities to serve as test beds for large scale 
deployment, which I think are very important. A series of 
similar incentives in a piece of legislation that will start 
moving in the direction that we think is important for the 
country.
    The President has talked about having a million electric 
vehicles on the roads by 2015 in this country. You know, there 
is this old saying, if you do not care where you are going, you 
are never going to be lost. That can be true with a country. It 
is true when referring to whether we want to set aspirations 
and way points in the future to decide where we would like to 
head. We did that when we decided that the internal combustion 
engine should be fed with gasoline. So let us provide very 
significant centuries' worth of incentives for gas and oil. But 
in today's era, there seems to be two issues. No. 1, national 
security. Our economic security is threatened by being as 
vulnerable as we currently are because of our dependence on 
oil, which we have little control. No. 2, the issue of climate 
change.
    Moving in the direction of an electric drive, vehicle fleet 
makes a great deal of sense, and I do not see it as picking 
winners and losers because, as I said, I support incentivizing 
a whole series of alternative approaches to transportation. But 
this, it seems, is going to be part of America's future.
    One final comment. Every single night when we go to bed, we 
have opportunities to plug something in to an electric grid 
that is not being used. We built it. It is paid for and it is 
not being used. We can use the spare capacity during the 
evening hours which was built for prime use during the daylight 
hours. We can use the electric grid and not have to spend a 
great deal more for that infrastructure, which I think makes a 
lot of sense.
    I am really pleased with this legislation. It is 
bipartisan. I think it will move us in the right direction.
    I am pleased you are holding a hearing, Mr. Chairman.
    The Chairman. All right. We have two very good panels here. 
The first is, of course, the administration, the Honorable 
David Sandalow, who is the Assistant Secretary for Policy and 
International Affairs in the Office of Policy and International 
Affairs in the Department of Energy. He is here to give us the 
administration's perspective on this legislation and the 
general subject of use of electric-drive vehicles in our 
transportation sector.
    David, why do you not go right ahead?

 STATEMENT OF DAVID SANDALOW, ASSISTANT SECRETARY, POLICY AND 
          INTERNATIONAL AFFAIRS, DEPARTMENT OF ENERGY

    Mr. Sandalow. Thank you, Chairman Bingaman, Ranking Member 
Murkowski, Senator Dorgan, other members of the committee. On 
behalf of Secretary Steven Chu and the Department of Energy, I 
would like to thank you for the opportunity to appear today to 
discuss electric vehicles and legislation to promote them.
    I would also like to extend a personal thank you to Pat 
Davis, the head of our vehicle technology program, who is right 
behind me, and all the fine civil servants at the Department of 
Energy who have been working for so long on these issues.
    The Department shares the committee's goal of accelerating 
electric vehicle deployment as a way to address two critical 
challenges facing our Nation: reducing our dependence on 
petroleum and mitigating greenhouse gas emissions.
    Mr. Chairman, this morning I walked out to my garage and 
unplugged my car from an extension cord. The battery in my car 
gets about 40 miles on a charge. So on my trip to work, which 
is about 5 miles, I use barely any gasoline.
    On average in city driving, I get over 80 miles per gallon. 
I often go weeks or more without refilling the tank in my plug-
in electric hybrid. The car is quiet, cheap to drive, and it 
has great pick-up.
    Mr. Chairman, electric vehicles are the future. The only 
question is how soon.
    The Department thanks the committee for the unprecedented 
$2.4 billion investment in our Nation's manufacturing capacity 
and infrastructure for electric vehicles provided through the 
American Recovery and Reinvestment Act. This is speeding our 
Nation's transition to electric drive while creating thousands 
of jobs. With Recovery Act funds, U.S. manufacturers are 
building the capacity to produce 50,000 plug-in hybrid electric 
vehicle batteries annually by the end of 2011 and 500,000 by 
the end of 2014. We are also deploying nearly 7,000 vehicles 
with Recovery Act funds and more than 16,000 electric charging 
points, as well as training code officials, technicians, 
engineers, and others who are critical to the successful 
transition to electrified transportation.
    With that as the foundation, I am pleased to provide the 
Department's perspective on the Promoting Electric Vehicles Act 
of 2010, S. 3495, and I recognize, as you said, Mr. Chairman, 
there are companion bills before the chamber.
    Mr. Chairman, with your permission, I would like to submit 
for the record my full written statement which has our views on 
the bill and will also provide technical comments.
    Today I would like to offer just a few brief observations 
about the proposed act.
    The Department of Energy supports the creation of a 
national program that includes technical assistance, work force 
training, and a targeted communities program to facilitate the 
rapid deployment of electric vehicles. We believe that such an 
effort will provide much needed resources, create models, and 
facilitate the local leadership needed for faster adoption of 
electric vehicles across the country.
    We agree with the committee's decision to limit the number 
of targeted deployment communities to no more than 15 
initially. Starting with a smaller number allows us to focus 
resources and build teams of experts that can support more 
widespread rollout by communicating best practices and lessons 
learned to other cities nationwide.
    We are already examining ways to work more closely with the 
communities on vehicle electrification, by the way. On July 22, 
the Department of Energy will host a workshop to engage key 
stakeholders in a discussion of critical issues such as 
permitting and how to better understand the ways the Department 
can support local efforts to deploy electric vehicles and 
infrastructure.
    The Department thanks the committee for recognizing the 
importance of work force training to the successful deployment 
and market penetration of electric drive vehicles and for 
including a training specific provision in the proposed 
national plug-in program.
    This legislation also authorizes an R&D program focused on 
advanced batteries, electric drive components and other 
technologies. We support this authorization, and those 
priorities align closely with ongoing activities in our vehicle 
technologies program.
    As for prizes, we support the concept of an Advanced 
Battery for Tomorrow Prize. We appreciate the committee's 
including of criteria to address battery size and cost, as well 
as range. Understanding that the prize seeks to push the 
envelope for state-of-the-art technology, we would like to note 
that today's vehicles generally do not require a 500-mile range 
and that based on input from our industry partners, we expect a 
300- to 400-mile range will meet consumers' vehicle performance 
demands.
    Mr. Chairman, my children are teenagers. They can scarcely 
imagine growing up in a world without personal computers, cell 
phones, or GPS devices. Now, I predict that some day one of my 
children will have one of their children look at them and say, 
you mean, you could not plug in cars when you were young? That 
is so weird.
    The speed with which we make the transition to electric 
vehicles will depend upon the leadership of everyone in this 
room and around this country.
    The Department of Energy thanks the committee for the 
opportunity to comment on this legislation, and we look forward 
to working with Congress to implement these programs.
    I would be pleased to answer your questions, Mr. Chairman.
    [The prepared statement of Mr. Sandalow follows:]

 Prepared Statement of David Sandalow, Assistant Secretary, Policy and 
              International Affairs, Department of Energy

                              INTRODUCTION

    Chairman Bingaman, Ranking Member Murkowski, and other Members of 
the Committee, thank you for the opportunity to appear before you today 
to discuss electric drive vehicles.
    The Department of Energy shares the Committee's goals for 
accelerating electric drive vehicle deployment as a way to address two 
critical challenges facing our nation--reducing our dependence on 
petroleum and mitigating greenhouse gas emissions.
    Nowhere are these priorities more challenging than in the 
transportation sector, which accounts for two-thirds of our petroleum 
consumption and about a third of our greenhouse gas emissions.\1\ 
Electric drive will play a key role in meeting these challenges. Simply 
put, drivetrain electrification can dramatically reduce both petroleum 
use and greenhouse gas emissions--whether we're talking about hybrids 
or plug-ins that use biofuel and renewable electricity, full electric 
vehicles recharged with renewable electricity, or fuel cell vehicles 
that use renewable hydrogen.
---------------------------------------------------------------------------
    \1\ Transportation Energy Data Book: Edition 28, calculated from 
data in Table 1.13 and Table 1.16
---------------------------------------------------------------------------
    The American Recovery and Reinvestment Act (P.L. 111-5) supported 
an unprecedented investment in our nation's manufacturing capacity and 
infrastructure for electric drive vehicles. With Recovery Act funds, 
U.S. manufacturers are building the capacity to produce 50,000 Plug-in 
Hybrid Electric Vehicle (PHEV) batteries annually by the end of 2011 
and 500,000 PHEV batteries annually by December 2014. As you know--with 
more than 95 percent of today's lithium-ion batteries for consumer 
electronics made in Asia--this commitment to building U.S. 
manufacturing capacity is significant and provides us an opportunity to 
lead the world in advanced lithium-ion battery technology.
    Recovery Act funds are also supporting the largest-ever coordinated 
deployment of nearly 7,000 electric vehicles and more than 16,000 
electric charging points. The detailed operational data we collect 
through this deployment will provide important insights about vehicle 
usage, charging patterns, and potential impacts on our nation's 
electrical grid necessary for accelerating broader, long-term 
deployment of vehicles and infrastructure. I will also add Recovery Act 
funds are supporting a number of programs to educate code officials, 
first responders, technicians, and engineers who are critical 
components of the human infrastructure needed for the successful 
transition to electrified transportation, both in terms of consumer 
acceptance and public safety. All together, this $2.4 billion 
investment through the Recovery Act supports 48 competitively-selected 
and cost-shared electric drive vehicle projects in more than 20 states 
that will directly result in the creation of tens of thousands of jobs 
in the U.S. battery and auto industries.
    With that as a foundation, I am pleased to offer the Department's 
perspective on the Promoting Electric Vehicles Act of 2010 (S.3495).

        COMMENTS ON THE PROMOTING ELECTRIC VEHICLES ACT OF 2010

    The Promoting Electric Vehicles Act of 2010 includes several 
important provisions to promote near-term deployment of plug-in 
electric drive vehicles, which complement and supplement the 
Department's ongoing activities, funded both through the Recovery Act 
and annual appropriations.
    The Department recognizes the potential benefits of activities such 
as those proposed by the National Plug-in Electric Drive Vehicle 
Deployment Program, including technical assistance, workforce training, 
and a targeted communities program to facilitate the rapid deployment 
of plug-in vehicles. We believe that such an effort will create models, 
and facilitate the local leadership necessary for faster EV adoption 
across the country, and would be a natural extension of the activities 
being undertaken through our Office of Energy Efficiency and Renewable 
Energy, Vehicle Technologies Program's Outreach, Deployment & Analysis 
(VT/ODA) activities, such as Clean Cities. The targeted deployment 
program would offer communities of different sizes in various parts of 
the country an opportunity to execute various deployment approaches and 
develop best practices that can be shared nationwide to address 
critical questions about planning and managing vehicle and charging 
infrastructure deployment.
    The Department appreciates that the community selection criteria 
includes an emphasis on diversity of climate and type of electric 
utility. Such diversity in pilot programs, particularly across 
electricity-generation sources, will be crucial for estimating the 
environmental impacts of expanded adoption of plug-in electric drive 
vehicles.
    We also agree with the Committee's decision to limit the number of 
targeted deployment communities to no more than 15, initially. Starting 
with a smaller number would allow us to focus resources and build a 
team of experts that can support a more widespread rollout through 
communication of best practices and lessons learned to other cities 
nationwide. We are already examining ways to work more closely with 
communities on vehicle electrification and infrastructure deployment, 
particularly in connection with our Clean Cities Program. The 
coalitions that comprise the Clean Cities network bring together state 
and local governments, early adopter fleets, local utilities, 
infrastructure developers, and other key stakeholders in a community to 
advance the deployment of alternative fuel vehicles. These public 
private partnerships are proven and effective resources for sharing 
information at the local level and are primed to support the rollout of 
electric drive vehicles and infrastructure. Through Clean Cities, we 
are planning a workshop, now scheduled for July 22, to engage key 
stakeholders in a discussion of critical issues such as codes, 
standards, and permitting of electric charging infrastructure and 
electric vehicle deployment best practices. Our goal is to better 
understand how the Department can support local community efforts to 
deploy EVs and infrastructure.
    To maximize the effectiveness of the targeted communities program, 
the Department would seek to coordinate this effort with related 
ongoing projects to deploy electric drive vehicles and infrastructure. 
Our Recovery Act projects for transportation electrification are 
building critical expertise through large-scale vehicle and 
infrastructure deployment, collecting data on vehicle-grid interaction 
and producing valuable lessons learned that can support and help to 
accelerate future deployments in other communities. In addition, we 
appreciate the thoroughness and detail of the deployment community 
selection criteria as outlined in the legislation, which would help to 
ensure the selected communities stand up as models for deployment 
across the country.
    Regarding the specified 120 days for applicants to submit 
proposals, we are concerned about asking communities to complete a 
significant amount of groundwork and coordination with multiple 
stakeholders prior to submitting their applications--much more than 
they're used to accomplishing. We believe 120 days may not provide 
enough time to complete that important work effectively. We ask that 
the Committee consider providing DOE the flexibility to establish the 
proposal deadline following some research to better understand 
community needs in this regard as long as we work within the specified 
360-day timeframe for announcement of community selections.
    The Department thanks the Committee for recognizing the importance 
of workforce training to the successful deployment and market 
penetration of electric drive vehicles, and including a specific 
provision in the proposed national plug-in program. The grant program 
for training first responders, code inspection officials, dealers and 
mechanics, and electricians responsible for charging point installation 
will complement and supplement Recovery Act projects and ongoing VT/ODA 
activities focused on these critical needs. Our recently-initiated 
Recovery Act efforts will provide valuable lessons learned and build a 
body of expertise to support implementation of the workforce training 
provision in this bill.
    We also believe that the technical assistance component of the 
proposed national deployment program is vital to the successful rollout 
of electric drive vehicles. The Department is well positioned to 
disseminate information and provide training and technical assistance 
to communities seeking to accelerate EV deployment. As an example, and 
as noted earlier, the Clean Cities network is primed to share best 
practices and lessons learned about permitting and inspection 
processes, as well as other local ordinances and opportunities for code 
official and first responder training. I would like to note, however, 
that the Department plays a supporting role in the development of model 
codes and standards. In regard to this provision, we can bring value to 
the process because of our extensive experience working with code 
development organizations (CDOs) and standards development 
organizations (SDOs) to facilitate consensus around the development and 
adoption of vehicle-and infrastructure-related codes and standards. We 
are also working to enable the harmonization of codes and standards at 
an international level.
    The Promoting Electric Vehicles Act includes several other 
significant provisions in addition to the National Plug-in Electric 
Drive Deployment Program; I will briefly comment on several of them 
here.

   The bill authorizes a R&D program focused on advanced 
        batteries, electric drive components, and other technologies 
        supporting the manufacture and deployment of electric drive 
        vehicles and charging infrastructure. These priorities are 
        aligned closely with ongoing activities in the Vehicle 
        Technologies Program--specifically, our Batteries and Electric 
        Drive Technology subprogram, which includes advanced battery 
        R&D and advanced power electronics and electric machines, as 
        well as our Vehicle and Systems Simulation and Testing 
        subprogram, which includes work to examine vehicle and 
        infrastructure interface issues through testing and evaluation.
   As for prizes, we support the concept of the ``Advanced 
        Batteries for Tomorrow Prize.'' We also appreciate the 
        Committee's inclusion of criteria to address battery size and 
        cost as well as range. Understanding that the prize seeks to 
        push the envelope for state-of-the-art plug-in hybrid battery 
        technology, we would like to note that today's vehicles do not 
        require a 500-mile range and that based on input from our 
        industry partners, we expect a 300-to 400-mile range to meet 
        consumers' vehicle performance demands.
   We also understand and appreciate the Committee's interest 
        in a technical advisory committee focused on plug-in hybrid 
        vehicles. We place great value in independent reviews and 
        external input to our program. You may be aware that the 
        National Academy of Sciences National Research Council conducts 
        independent biennial reviews of both our light-duty and heavy-
        duty vehicle research programs. We would like to suggest to the 
        Committee that any new review functions be coordinated with 
        other ongoing and planned review activities.

    To conclude, the Department of Energy thanks the Committee for the 
opportunity to comment on this legislation and our ongoing related 
Recovery Act activities. We look forward to working with Congress to 
continue to implement these programs. They will accelerate the 
deployment of electric drive vehicles and infrastructure and help us 
achieve our national objectives for reducing petroleum use and 
greenhouse gas pollution.

    The Chairman. Thank you very much. Let me start with a few 
questions.
    One of our problems--and Senator Dorgan alluded to this a 
little bit in his statement, but one of our problems I have 
noticed over the years is that the Federal Government gets very 
enthusiastic about particular technologies to solve our energy 
problems, and we usually demonstrate the enthusiasm with a big 
event at the White House and we bring in everybody, all the 
CEOs of the car companies, and talk about how we are going to 
do something. Then the whole thing goes away after a few years, 
and we are on to the next project.
    There are programs that are currently being administered by 
the Government to promote more development and use of electric 
vehicles. How can we be sure that we are not adding other 
things that will cancel out some of those? How can we keep the 
ones that are working? How can we have some continuity of focus 
in this area? What do you see as the provisions in this bill 
that would help us do that and the ones that might cause us to 
lose that focus?
    Mr. Sandalow. Thanks for the question, Mr. Chairman, and I 
noted that Ranking Member Murkowski asked a similar question. 
It is exactly the right one.
    The Federal Government should stay away from picking 
technologies. For example, in this area, the Federal Government 
should avoid picking between, let us say, lithium-ion batteries 
and nickel metal hydride batteries or other types of specific 
chemistries and battery applications. Certainly in my view that 
would be unwise.
    There are technology categories that require public 
investment, and electric drive broadly is one of those. In 
order for electric drive to thrive, we are going to need an 
infrastructure of people and engineers who know how to work 
with electric drive technologies. We are going to need charging 
points. We are going to need utilities to develop the different 
types of tools and regulatory structures that will make these 
cars work. So having Congress provide leadership in this 
direction and helping set the direction for the Nation for a 
broad technology category is, in my view, extremely 
appropriate.
    As Senator Dorgan has already said in this hearing, 100 
years ago Congress did the same thing with respect to oil and 
gas technology, and that led to extraordinary prosperity on the 
part of the Nation as that infrastructure was built up with 
Government support over the course of the past century. We need 
to do the same thing in the 21st century, which is invest in 
21st century technologies, provide broad direction for 
technology categories, and in my view, that is what this bill 
and the companion bills before you do.
    The Chairman. Let me ask on the targeted communities. It 
seems to me we may be far enough along in the development of 
this technology that we should be going nationwide with 
deployment of the technology. The idea of having targeted 
communities that we are going to work with to see if they can 
sort of lead the way and everybody else will watch to see how 
well they do--we may be too far down the road toward having a 
real technology option for people here for us to be thinking 
about it that way.
    What is your thought on the whole notion of targeted 
communities? Especially if we tell DOE to pick 15 targeted 
communities and none of them turn out to be in New Mexico----
    [Laughter.]
    The Chairman [continuing]. I am going to be hearing from a 
lot of communities in my State saying why are our tax dollars 
going to help these other places. Why is this not available to 
all of us?
    Mr. Sandalow. Thank you, Mr. Chairman. We should be going 
nationwide and we will be going nationwide with this 
technology. I predict that consumers and drivers all over this 
Nation are going to be buying electric cars when they are 
widely available. At the same time, with Federal programs, we 
need to start somewhere. There will not be unlimited funds. 
Ranking Member Murkowski has already referred to the cost 
constraints that we must face in implementing this and any 
other program. So in doing that, our view is it is wise to 
focus on a limited number of areas since there is essentially 
no choice and try to create the knowledge base and the tools in 
those areas that the rest of the Nation can learn from.
    In this bill before us, there are, I think, very wise 
provisions that would balance the different types of 
communities that are selected regionally, geographically, in 
terms of size of the communities, and by other factors. I think 
those are exactly the type of criteria that should be used as 
we implement a program like this.
    The Chairman. Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    I would venture to say that I am probably not going to have 
any communities in Alaska either that are going to be the 
targeted communities. We need a little bit of range up there.
    But I will tell you that we have been plugging our cars in 
for a long time. If you do not plug them in, you cannot start 
them in the wintertime when it is too darned cold out there. I 
think some of our northern neighbors know that as well.
    Mr. Sandalow, I wanted to ask you about what is going on 
internationally in so far as electric vehicles. How does what 
we are proposing here compare to other international efforts? 
Are the type and the scope of the policies here in this country 
less or roughly on par with what is happening in other parts of 
the world?
    Mr. Sandalow. Thank you for the question, Senator 
Murkowski, and it is an extremely important one.
    In my job in the past year, I have had the opportunity to 
visit China, in particular, a number of times, as well as other 
countries, and I believe it is important for us to focus on the 
fact that the rest of the world is moving out quickly on this 
technology. In China, there is an electric vehicle deployment 
program that has recently grown from 13 cities to 22 cities, 
and that country is investing extremely heavily in battery 
technology. They are, in fact, selling, they tell us, over 20 
million electric scooters every year in that country and 
planning to make the transition to electric vehicles in the 
years ahead. So this market is moving out quickly.
    The question before us is whether the United States will 
lead in this technology. I believe we have the opportunity to 
do that if we make the types of investments and work together 
in the way suggested by this bill in the years ahead.
    Senator Murkowski. You mentioned that in China they have 
seen an increase in the number of targeted communities that 
they have done. Is this typically how you see the rollout of 
the electric vehicles coming into countries in different areas, 
is there are targeted communities where you start it first, 
going to the chairman's question about why not go nationwide?
    Mr. Sandalow. It is a great question, Senator. This is a 
new technology. So this is just starting to happen in other 
countries. But in Israel and in Denmark and some places where 
electric vehicles are beginning to be rolled out, yes, they do 
happen in relatively concentrated places, and you start in 
relatively concentrated places and then branch out. That is not 
inconsistent with widespread use of the technology, but 
focusing resources in a few places I think in my opinion can 
help the widespread dissemination of this approach.
    Senator Murkowski. That is all for now, Mr. Chairman.
    The Chairman. Senator Dorgan.
    Senator Dorgan. Mr. Chairman, thank you very much.
    I think we are always going to need oil and gas. This is 
not a case of deciding that they are not valuable resources. If 
we move toward an electric fleet of transportation vehicles, it 
will substantially reduce our reliance on foreign oil, which I 
think is very important. It will improve both our energy 
security and national security.
    I am wondering if you might have a grandchild someday who 
will ask you, Grandpa, what is that noise under that hood, and 
you will say, well, that is an internal combustion engine 
running on gasoline, because the new electric fleet does not 
make substantial sounds.
    I do not know how fast this moves. I do think Senator 
Murkowski asked the question that others will ask about picking 
winners and losers, and I am going to ask you about that in 
just a moment.
    In the appropriations bill that I wrote last year on energy 
and water, I required DOE to contract with the National 
Academies to perform a study on all alternative transportation 
fuel options and then to provide policy suggestions and options 
that would lessen our dependence on foreign oil, a 
comprehensive road map. I did that because we do not know where 
this will end up, but we do have a notion of the kind of 
technologies that are now becoming available. This unbelievable 
investment in new battery technology can move us from last 
place or second or third place to first place. So last year's 
appropriations bill will require that we look at all 
technologies available.
    But let me ask you the question about when we introduced 
the legislation dealing with electrified fleets and the 
infrastructure required to support such fleets. Senator 
Murkowski mentioned that she was worried that such legislation 
wiould pick winners and losers. I said, we have historically 
provided incentives for similar things. I would like to get 
your opinion on the idea of this, picking winners and losers, 
because I think this will be a prevalent concern.
    Mr. Sandalow. Senator, I think it is extremely important 
that we invest in a broad range of technologies in this area, 
and with this committee's support, the Department of Energy is 
currently investing not just in electrification but also in 
biofuels and in hydrogen and in natural gas technologies and in 
improving the efficiency of internal combustion engines. But 
that should not prevent us from investing heavily in leading 
technological approaches such as electric drive.
    If I could on this note, I would like to quote Senator 
Lamar Alexander, who has been a leader on this issue and, of 
course, a cosponsor of your legislation, who said, ``The single 
best way to reduce America's use of oil is to electrify our 
cars and trucks.'' Now, I think we need to invest in a range of 
technologies, but we need to focus in on those that have 
extraordinarily high potential and that in my opinion is 
electric drive.
    Senator Dorgan. I support all the things you have just 
described. I mean, I think we should do all of them and do them 
well.
    The National Research Council put out a study late last 
fall that had what I consider to be very unrealistic 
expectations for battery costs, it projected very high battery 
costs, and very low potential penetration rates for vehicles. I 
assume you have access to the same kind of numbers. What is 
your assessment of this report which was not very positive?
    Mr. Sandalow. We share concerns about that report, Senator. 
I am familiar with it, and I think the numbers in that report 
were unrealistically high and they are inconsistent with some 
of the data that we have received in the course of our work. We 
believe both that the costs of batteries today are lower than 
were set forth in that report and that the rate of improvement 
of battery technologies will be faster, particularly if we 
invest in it in the ways suggested in this bill and others.
    Senator Dorgan. If nothing else happens, accepting that 
some other countries are moving toward an electrified fleet, in 
those countries, they will still use the internal combustion 
engine. My notion is that as China and India look at the rest 
of the world and decide, you know what, we need to be driving 
here. We need to be driving something. So you have very low-
priced cars made available with more and more people wanting 
those cars, perhaps there will be as many as 300 million to 400 
million additional vehicles on the road in the years ahead, all 
looking for a gas station once a week. Is that not ominous for 
a country like ours that requires a lot of oil from elsewhere 
to come into our country, 70 percent of which will be used in 
the transportation fleet? Does that not just drive us to say, 
you know what, things are going to change. They are changing 
already. They are going to change not for the better, but for 
the worse. Meanwhile we have other alternatives available right 
now. We have an infrastructure that has been built to produce 
peak power and it is largely unused at night when we can use it 
to plug in our vehicles. Your notion of that?
    Mr. Sandalow. There is no question, Senator. We spend 
hundreds of billions of dollars a year in this country to buy 
foreign oil. I believe the figure in 2008 was $380 billion or 
close to it. It is an extraordinary threat to our national 
security, and one of the best ways to reduce threats to our 
national security is to change our vehicle fleet so that we are 
not dependent on that type of oil.
    Senator Dorgan. Mr. Chairman, the one thing that is certain 
to all of us is that we understand change is very hard, and 
yet, inevitably the thing that we will all experience all of 
our lives is change. But when you talk about these kinds of 
things, picking ideas and moving forward, change is very, very 
hard to accomplish because we live in a circumstance wedded to 
what we do. I just think this is such an important subject for 
us in terms of national security, economic security, and also 
protecting our climate.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Burr.
    Senator Burr. Thank you, Mr. Chairman.
    Welcome, Mr. Secretary.
    There is a likelihood North Carolina will be an area that 
is picked and the tremendous amount of money going into North 
Carolina right now on battery technology, much of which is 
coming from the Department of Energy in the over $2 billion 
that was available under the stimulus package.
    Let me ask you. S. 3495 authorizes another $1.5 billion in 
battery R&D. At what point will we have filled the coffers 
sufficiently with technology money to believe that we can reach 
that critical mass in the technologies that we need for this to 
really penetrate the market?
    Mr. Sandalow. Senator, I was visiting Davidson with my 17-
year-old----
    Senator Burr. A very good pick.
    Mr. Sandalow. Thank you--when by coincidence the President 
showed up in Charlotte to announce a battery grant at a 
facility there. So I am familiar with what is happening in your 
State. I think it is a tremendous opportunity all over the 
country to create jobs in this area.
    I would not want to pick a specific number for research 
dollars at this point. I do not think we know. That is 
something that will emerge over time. But one thing I am 
confident of is that investment in this area will pay dividends 
for the American people. As we drive down the costs of battery 
technologies, it is going to speed the dissemination of these 
vehicles. It is going to reduce our dependence on oil, and it 
is going to create jobs. In the past the United States has 
thrived when we have had focused efforts on research and 
development that have led to extraordinary results. That is the 
type of thing we can do in this area, and I think bills like 
this will help us get there.
    Senator Burr. Even health care, the research and 
development that goes on on the research bench is sometimes 
weighed against commercialization of that product, that 
breakthrough because that researcher is going to have to go out 
and find more research money. Now, I am not suggesting that we 
are in the same situation on the battery.
    But we have got three major challenges, as I see it, to 
electric penetration, two of which would be range and cost. 
What is the number that we have got to hit for the range that 
you bring in enough of the American people that you have now 
affected the manufacturing cost? At what price point does it 
need to be for that critical mass to be met?
    Mr. Sandalow. These are big questions and important ones.
    A couple of points on this, Senator. There will be 
different driving habits. So I think with respect to the range, 
there is no one single answer. There are some people who--like 
me, I drive 5 miles back and forth to work every day. I have 
got a car that I basically use for that purpose and almost 
nothing else. There are lots of Americans who drive cars in 
that way. I think the figures are that most Americans drive 30 
miles or less every day. But then lots of Americans are out 
there driving hundreds of miles every day in big States.
    Now, for the Americans who drive short distances, one type 
of technology might be better. For the Americans who drive 
longer distances, other types of technologies might be better. 
So I do not think there is any one single----
    Senator Burr. Should our strategy not be how do we get 
enough market penetration through electric vehicles that, one, 
it affects the manufacturing cost and we are bringing that 
down, so we are addressing point No. 2. We are reducing the 
costs where it is more affordable for more people. Would that 
not in itself fuel additional R&D at the company level to try 
to figure out how to address the range so that you are pulling 
different customers in the door?
    Mr. Sandalow. There is no question. Two points on that.
    First, with respect to cost, one point that is worth 
remembering and emphasizing is that it costs much less to drive 
a mile on electricity than it does on gasoline. That electric 
car that I am driving around--it costs me about the equivalent 
of 75 cents a gallon to drive. Now, the upfront purchase price 
of the car is higher. We need to get that upfront purchase 
price down. But driving on electricity is much, much cheaper 
because electric motors are more efficient.
    You raised the issue, Senator, of the balance between 
Government funding and private funding in this area, and that 
is an extremely important one. There is certainly an extremely 
important role for private sector commercial investment in 
research and development. But the public sector also has a role 
in doing the type of research that is pre-commercial, the 
advanced research that no individual country can benefit from. 
That has been the model over many decades. We will not get 
where we need to go if all the research and development in this 
area is simply in the private sector because there is advanced 
research and development that needs to be done. So we need to 
be doing that in our public sector as well.
    Senator Burr. I agree with you totally. I think that as we 
head into this, which is an incredibly important sector, we 
have also got to figure out up front where is it we are trying 
to get to. We are not just out trying to fuel the research 
bench with public and private money. We are trying to have 
replacement vehicles over the combustible engine for some 
portion of America, and from a national security and economic 
security standpoint, long-term it means the majority of 
Americans preferring these platforms, and that the combustion 
engine is on its way out as we know it today.
    I want to make sure our policies send us in the right 
direction and just do not send us in one direction that has no 
specific area then that we are pivoting to.
    Senator Dorgan. Would the Senator yield on that point?
    Senator Burr. I would be happy to.
    Senator Dorgan. I think generally speaking most that have 
been working in this field feel that you need to get a battery 
capability for a 300- to 400-mile range. We have a prize in 
this legislation for a 500-mile battery. That, of course, is 
what we have as an aspiration to develop in the future. But I 
think most people feel you are going to need to have a 300- to 
400-mile range with the battery.
    Mr. Sandalow. If I might also. The Department has 
established some targets for battery costs as well, and we are 
looking to try to get battery costs down to $300 per kilowatt 
hour, for example, which we think will support a commercial 
market of pretty substantial size.
    The Chairman. Senator Stabenow.
    Senator Stabenow. Thank you very much, Mr. Chairman.
    First, I think, as I understand it, it is actually a very 
important day today because I think we need to say happy 
birthday to Senator Murkowski.
    Senator Murkowski. No.
    Senator Stabenow. That was on my schedule as being your 
birthday today. So we will----
    Senator Murkowski. It was last month.
    Senator Stabenow. Oh, well, they made a mistake. Here I was 
trying to celebrate your birthday today. I was ready to sing. 
We will not sing. I was ready to sing. With that, we will take 
that off the schedule today, singing for Senator Murkowski.
    [Laughter.]
    Senator Stabenow. So, Mr. Chairman, thank you very much for 
your leadership on this issue and to Senator Dorgan as well.
    Yesterday I attended an opening groundbreaking for a 
battery facility in Midland, Michigan. Dow Kokam, which is a 
partnership, and it is one of 16 different facilities in 
Michigan that is now involved in battery manufacturing for 
these vehicles. It would not have happened without Senator 
Dorgan's leadership on appropriations and Senator Bingaman's. 
So thank you to both of you for that.
    When we look at this bill, which I wholeheartedly agree 
with the goal of this bill, one of the things, Mr. Chairman, 
that I want to work with you on and work with the sponsors on 
is to make sure that--and I know you share this, but making 
sure that we are, in fact, incentivizing purchasing of the 
manufacturing of these products in this country so that these 
are American made and we are not incentivizing folks coming in 
from overseas who already have their own incentives in their 
own country. So I am looking at this with an eye to this as we 
go through it.
    My question first, though, relates to how we incentivize, 
in addition to what is being talked about in this bill, and I 
think there are some important questions as to how we do this. 
We have got to get started doing a few communities or 
incentivizing something across the country. We know we have to 
get started somewhere.
    But one of the places that we can really get started much 
more aggressively I believe than where are is in our own 
Federal purchasing. I believe that is a piece in the bill as 
well. So pointing to the General Services Administration now 
between the post office and the agencies of government and the 
military, we have over 651,000 vehicles used by the Government. 
We did a small piece in the Recovery Act, but that alone could 
make a huge difference in creating the market.
    So I am asking, do you believe that we are, in fact, doing 
enough in this legislation and doing enough in general compared 
to what we purchase every year and what we could be doing to 
jump-start not just infrastructure in individual communities 
but the market as a whole?
    Mr. Sandalow. Thank you for the question, Senator.
    We can do a lot with Federal procurement of vehicles. This 
bill moves us in the right direction on that front. The Federal 
Government, the last time I looked, buys over 60,000 vehicles a 
year. There are tremendous opportunities, as you suggest, to 
use Federal purchasing power in order to make a transition in 
this market. So I look forward to working with you, with 
members of the committee to move forward on those provisions in 
this bill and do whatever we can to improve the ability of the 
Federal Government to use its purchasing power to promote the 
transition toward electric vehicles and other types of advanced 
technologies.
    Senator Stabenow. Do you need legislation in order to be 
able to do that? Or is that something that the administration 
can make a commitment to and proceed on right now?
    Mr. Sandalow. The administration is already making steps in 
this area with a number of purchasing decisions. This type of 
legislation is extremely helpful, Senator, and it sets the 
direction of Congress. It makes the intent of Congress clear on 
that and provides authorities which will be very helpful to us 
in doing exactly that.
    Senator Stabenow. Obviously, as you mentioned, the price on 
your vehicle was higher, even though you are saving money in 
the long run, higher than you would like it to be. We provide 
tax incentives and so on. But again, it is just like with 
computers. It is just like with anything else. The more people 
who are purchasing it, the more the price comes down. So I 
think we have a tremendous ability in our marketing--our own 
ability in the Federal Government to bring down those prices.
    Finally, I would just ask as we look at how we incentivize, 
I believe that we absolutely have to incentivize the electric 
vehicles as very much a part of our future. But what about 
multiple electric drive pathways such as fuel cell electric 
vehicles, other kinds of options so we are going to a broader 
range around electric vehicles? I do not believe that is in 
this bill, and I wondered if you might speak to having a 
broader view in terms of the electric vehicle.
    Mr. Sandalow. We should certainly be investing in a broad 
range of electric drive technologies, and that would include 
not just batteries but fuel cells and other types of 
approaches. I think the consensus view of most experts is that 
battery-drive vehicles will be on the market sooner than those 
using fuel cell technologies. So I think it is appropriate to 
focus in that direction. But we need to be looking at all 
different pathways to reduce our dependence on oil.
    Senator Stabenow. Thank you, Mr. Chairman.
    The Chairman. Senator Corker.
    Senator Corker. Mr. Chairman, thank you. I appreciate the 
testimony of the Secretary. I am going to actually wait for the 
second panel. I am trying to juggle financial reform and this. 
So thank you.
    The Chairman. We have all had a chance to ask questions. 
Thank you very much for your testimony, and we will allow the 
second panel to come forward at this point.
    The second panel is made up of Fred Smith, the Chairman, 
President, and CEO of FedEx Corporation in Memphis, Tennessee; 
Kathryn Clay, the Director of Research with the Alliance of 
Automobile Manufacturers here in Washington. Brian Wynne is the 
President of the Electric Drive Transportation Association here 
in Washington. David Friedman is the Research Director with the 
Clean Vehicles Program of the Union of Concerned Scientists 
from Oviedo, Florida. Alan T. Crane is the Senior Program 
Officer with the National Research Council here in Washington. 
Thank you all very much for being here.
    We will have our usual procedure here. We will just take 
the written statement that each of you have prepared and 
submitted and make that part of the record. If each of you 
could take 5 or 6 minutes and summarize the main points you 
think we need to understand from your testimony, that would be 
very appreciated, and then we will have questions.
    Why do we not start right here with Mr. Smith and go right 
across the table? Thank you for coming.

 STATEMENT OF FREDERICK W. SMITH, CHAIRMAN, PRESIDENT AND CEO, 
  FEDEX CORPORATION, CO-CHAIRMAN, ENERGY SECURITY LEADERSHIP 
         COUNCIL, AND MEMBER, ELECTRIFICATION COALITION

    Mr. Smith. Mr. Chairman, thank you very much for having me 
here. Senator Murkowski, Senator Dorgan, other members of the 
panel.
    I will, as you asked, just summarize my testimony.
    I think it is important to state how I got involved in this 
because I think it bears on the question.
    A number of business and retired military officers came 
together several years ago because we shared the concern that 
the Nation had an enormous economic and national security 
problem in our reliance on imported petroleum, as Senator 
Dorgan expressed so well. It was headed by General P.X. Kelley, 
former Commandant of the Marine Corps, on the military side and 
myself as the co-chair on the business side. It encompassed a 
number of major users of petroleum like FedEx Corporation. We 
operate 670 airplanes, 85,000 vehicles, burn a billion and a 
half gallons of fossil-based fuel a year. So this was a very 
significant issue.
    The report that we produced with that committee was a 
central part of the Energy Act of 2007 which called for 
maximizing domestic oil production and reinstating new fuel 
efficiency standards. It was from that work that we concluded 
that electrification of light-duty transportation offered the 
greatest promise to significantly reduce petroleum usage in 
general and our dependence on imported petroleum from hostile 
parts of the world.
    An electrification coalition was put together and that 
coalition produced a study called The Electrification Roadmap 
whose recommendations and conclusions were then analyzed by the 
University of Maryland. The results were really quite profound 
because if we keep on a business-as-usual trajectory and 
assuming a reasonable GDP growth over the next 25 years, our 
light vehicle fuel consumption will increase from a little less 
than 10 million barrels of fuel per day to about 14 million 
barrels of fuel per day by 2035.
    With the adoption of The Electrification Roadmap proposals, 
which parallel in the main Senator Dorgan's legislation, 
accompanied with the advantages of the new fuel efficiency 
standards, those numbers by 2035 decreased to 4 million barrels 
a day. That is an incredible swing.
    Now, we believe that sometimes things are so self-evident 
that you have to jump on this horse, and the reality is the 
battery technology that has been developed for our 
telecommunications and IT world is now capable of providing 
vehicles which have an adequate range in utility. In that 
regard, we have a number of all-electric vehicles that we are 
testing in California at the moment. We brought it to 
Washington not too long ago. But let me give you some numbers 
on that which I think gets to some of the points that Senator 
Burr made.
    This is a vehicle that is manufactured by a joint venture 
between Navistar and Modec, which is a European company. It is 
made just west of Chicago in a Navistar plant. It is powered by 
A123 system batteries. I believe they are made in Michigan. 
They could be in the Indiana plant, but I think they are made 
in Michigan.
    That vehicle has about 2 tons of payload. It has 100 miles 
of range per day, which is perfectly adequate for light-duty 
pick-up and delivery operations. It costs about 20 percent per 
mile to operate compared to a diesel alternative. So there is 
an 80 percent benefit in operating costs.
    The issue is its acquisition cost, and the acquisition cost 
is roughly 80-85 percent higher than the diesel equivalent.
    Our belief is, based on talks with battery manufacturers 
here and overseas, including in Japan and China, there is a 
high likelihood that the cost of those batteries will be halved 
over the next 3 to 5 years. Now, 70 percent of that Navistar-
Modec vehicle's cost I just mentioned to you is represented by 
the battery. So if you get to that point where you brought the 
cost of those batteries down and hopefully have significant 
improvements in the power generation as well, the economics of 
this are compelling. So you reduce the amount of petroleum used 
in the economy, reduce the amount of CO2 emitted. 
You obviously produce a great opportunity for American 
manufacturing jobs.
    We think the recommendations in Senator Dorgan's bill to 
put these deployment communities in place--they do not mitigate 
the fact that you can get these benefits of the tax credits 
anyplace in the United States, but to get those cost 
performance metrics to the level I mentioned, you have to have 
scale production, and the best way to do that is what is 
represented in the legislation in question here in our opinion.
    So we feel very strongly that similar to certain 
technologies that just have such compelling advantages over 
their predecessors like gas turbines and aviation, replacing 
the reciprocating engines, that the electrification of light-
duty transportation falls in this category, and we would 
strongly recommend for the national security and national 
economic risks articulated by Senator Dorgan that this 
legislation move forward.
    Thank you.
    [The prepared statement of Mr. Smith follows:]
Prepared Statement of Frederick W. Smith, Chairman, President and CEO, 
FedEx Corporation, Co-Chairman, Energy Security Leadership Council, and 
                   Member, Electrification Coalition
    Good morning, Chairman Bingaman, Ranking Member Murkowski, and 
members of the Committee. I would like to thank you for giving me this 
opportunity to speak to you regarding the Promoting Electric Vehicles 
Act of 2010, a bill that I think represents a tremendously important 
step forward in our nation's effort to end the very real and pressing 
threats posed by our dependence on petroleum.
    I am proud to serve both as co-Chairman of the Energy Security 
Leadership Council and as a member of the Electrification Coalition, 
two organizations dedicated to facing these threats head on.
    The Energy Security Leadership Council, formed in 2006, is a 
coalition of business executives and retired national security leaders 
who believe that our dependence on oil, much of it imported from 
unstable and hostile regimes, poses an unacceptable economic and 
national security threat.
    The Electrification Coalition was formed in 2009, and is made up of 
a group of business leaders who represent the entire value chain of an 
electrified transportation sector and who are committed to promoting 
policies and actions that facilitate the deployment of electric 
vehicles on a mass scale.
    I became involved in these organizations for a single reason: it is 
my belief that after terrorism and the proliferation of weapons of mass 
destruction, our increased dependence on petroleum represents the 
biggest single threat to our nation's economy and national security.
    I can speak to this issue personally. FedEx delivers more than 7 
million packages and shipments per day to more than 220 countries and 
territories. In a 24-hour period, our fleet of aircraft flies the 
equivalent of 500,000 miles, and our couriers travel 2.5 million miles. 
We accomplish this with more than 275,000 dedicated team members, 670 
aircraft, and some 70,000 motorized vehicles worldwide.
    FedEx's reliance on oil reflects the reliance of the wider 
transportation sector, and indeed the entire U.S. economy. Oil is the 
lifeblood of a mobile, global economy. We are all dependent upon it, 
and that dependence brings with it inherent and serious risks.
    In 2008, when oil prices spiked, Americans consumed nearly 20 
million barrels of oil a day--one-fourth of the world's total. We 
imported 58 percent of the oil we consumed, leading to a U.S. trade 
deficit in crude oil and petroleum products that reached $388 billion--
56 percent of the total trade deficit.
    A year later, with oil prices averaging just $62 per barrel and oil 
consumption down, the United States still ran a $200 billion trade 
deficit in crude oil and petroleum products. At current prices and 
demand levels, the trade deficit in crude oil and refined products is 
set to return to pre-crisis levels near $300 billion.
    At the crux of America's oil dependence is the energy demand of the 
transportation sector. Transportation accounted for almost 70 percent 
of American oil consumption in 2008. Cars and trucks were 94 percent 
reliant on oil-based fuel for their energy, with no substitutes 
immediately available in anything approaching sufficient quantities.
    The volatility of oil prices affects every American. At the 
beginning of 2001, oil prices were steady at $30 per barrel. Over the 
subsequent five years, prices steadily rose, reaching $75 per barrel in 
June of 2006. After retreating slightly, benchmark crude prices jumped 
50 percent in 2007, from $60 per barrel in January to more than $90 in 
December. In 2008, oil prices soared rapidly, eventually reaching their 
all-time high of more than $147 per barrel on July 3.
    We are all aware of the sharp financial burden on U.S. households 
that faced--and still face--resets in their adjustable rate mortgages. 
But it is important to understand that increases in energy costs have 
been on an equivalent, or even greater, order of magnitude for the 
entire American economy. A typical subprime borrower with a poor credit 
history who bought a $200,000 house in 2006 with a 2 year/28 year ARM 
with a 4 percent teaser interest rate for the first two years would 
have seen monthly mortgage payments increase from about $950 a month 
before the reset to about $1,330 after the reset--an increase of about 
$4,500 a year. In the meantime, between 2001 and 2008, the average 
retail price of gasoline increased from $1.46 to $3.27, costing typical 
households $1,990 a year in increased fuel expenses. And that increase 
in energy costs affected all U.S. households--not just the one 
household in 20 that held a subprime mortgage.
    This burden, multiplied across millions of households, was a major 
contributor to the ensuing economic slowdown. We saw an explosion in 
home ownership, with many purchases being made by people who had 
heretofore not qualified for mortgages. When the price of oil and the 
price of gasoline began to rise, and inflation on commodities began to 
take hold, and interest rates began to increase, you had a tremendous 
diminution in purchasing power and cash flow, which contributed to 
people having to walk away from their mortgages. The rise in oil prices 
was the match that lit the fuse of the mortgage mess and the subsequent 
recession. The U.S. economy lost more than 700,000 jobs between 
December 2007 and the beginning of September 2008, and the unemployment 
rate increased from 4.5 percent to 6.1 percent--all before the 
financial crisis truly hit later in September.
    And the steps we usually would take to help strengthen the economy 
and create jobs in times of weakness are just as easily overcome by oil 
price volatility. The total effect of changes to the federal tax code 
from 2001 to 2008 code was a decrease in annual federal income and 
estate taxes by about $1,900 for the median household. But a typical 
household's energy costs rose more than that. In other words, every 
penny that the most Americans saved due to federal income and estate 
tax cuts over those eight years was spent on higher gasoline bills.
    All told, U.S. families and businesses spent more than $900 billion 
on refined oil products in 2008, representing 6.4 percent of GDP. 
Today, prices are off their highs. But for how long? Oil is back near 
$80 per barrel. Many of the underlying fundamentals that pushed oil 
prices up are still present today, and once demand--temporarily reduced 
due to the recession--begins to pick up again, prices are likely to 
follow. Our oil dependence could strangle an economic recovery just as 
it is beginning to take hold.
    The threat to American national security is equally as urgent. The 
vulnerability of global oil supply lines and infrastructure has driven 
the United States to accept the burden of securing the world's oil 
supply. Much of the infrastructure that delivers oil to the world 
market each day is exposed and vulnerable to attack in unstable regions 
of the world. According to the U.S. Department of Energy, each day more 
than 50 percent of the world's oil supplies must transit one of six 
maritime chokepoints, narrow shipping channels like the Strait of 
Hormuz between Iran and Qatar. Even a failed attempt to close one of 
these strategic passages could cause global oil prices to skyrocket. A 
successful closure of even one of these chokepoints could bring 
economic catastrophe.
    To mitigate this risk, U.S. armed forces expend enormous resources 
patrolling oil transit routes and protecting chronically vulnerable 
infrastructure in hostile corners of the globe. This engagement 
benefits all nations, but comes primarily at the expense of the 
American military and ultimately the American taxpayer. A 2009 study by 
the RAND Corporation placed the cost of this defense burden at between 
$67.5 billion and $83 billion annually.
    Oil dependence also constrains U.S. foreign policy. Whether dealing 
with uranium enrichment in Iran or a hostile regime in Venezuela, 
American diplomacy is distorted by the need to minimize disruptions to 
the flow of oil. Too often, oil dependence requires us to accommodate 
hostile governments that share neither our values nor our goals, 
putting both the United States and its allies at risk.
    Finally, petroleum consumption poses a long-term threat to global 
environmental sustainability. Curbing emissions is a global issue, and 
there is not yet an international consensus on a long-term 
stabilization objective or on the changes in emissions trajectory 
needed to meet such a goal. International discussions are increasingly 
centered on a stabilization level that ranges between 450 and 550 parts 
per million (ppm) CO2 equivalent (CO2-eq). In a 
recently released report, the International Energy Agency assessed the 
make-up of U.S. new passenger vehicle sales that would be required to 
meet a 440 ppm target. The analysis found that by 2030, more than 60 
percent of new vehicle sales would need to be based on some form of 
electrification, ranging from traditional hybrids to pure electric 
vehicles.
    We cannot continue down this path. We cannot continue to send 
untold billions of dollars and jobs overseas to pay for our addiction. 
We cannot continue to send men and women into harm's way to protect an 
increasingly vulnerable supply line. We cannot continue to put our 
future in the hands of hostile nations or fanatical terrorists who can 
turn off our crucial oil lifeline at the drop of a hat.
    There is a solution. The lynchpin of any plan that is serious about 
confronting oil dependence must be the transformation of a 
transportation system that today is almost entirely dependent on 
petroleum. The solution can be found in something that nearly every 
single one of you has either on your belt or on the table in front of 
you. The lithium ion batteries that power our cell phones and laptop 
computers can one day form the nucleus of an electrified transportation 
sector that is powered by a wide variety of domestic sources: natural 
gas, nuclear, coal, hydroelectric, wind, solar, and geothermal. No one 
fuel source--or producer--would be able to hold our transportation 
system and our economy hostage the way a single nation can disrupt the 
flow of petroleum today.
    Electricity represents a diverse, domestic, stable, fundamentally 
scalable energy supply whose fuel inputs are almost completely free of 
oil. It would have clear and widespread advantages over the current 
petroleum-based system:

          1) Electricity is Diverse and Domestic: Electricity is 
        generated from a diverse set of largely domestic fuels. Among 
        those fuels, the role of petroleum is negligible. In fact, just 
        1 percent of power generated in the United States in 2008 was 
        derived from petroleum. An electricity-powered transportation 
        system, therefore, is one in which an interruption of the 
        supply of one fuel can be made up for by others. This ability 
        to use different fuels as a source of power would increase the 
        flexibility of an electrified light-duty vehicle fleet. As our 
        national goals and resources change over time, we can shift 
        transportation fuels without having to overhaul our 
        transportation fleet again. In short, an electrified transport 
        system would give us back the reins, offering much greater 
        control over the fuels we use to support the transportation 
        sector of our economy. Moreover, while oil supplies are subject 
        to a wide range of geopolitical risks, the fuels that we use to 
        generate electricity are generally sourced domestically. All 
        renewable energy is generated using domestic resources. We are 
        a net exporter of coal, which fuels about half of our 
        electricity. Although we currently import approximately 16 
        percent of the natural gas we consume, more than 90 percent of 
        those imports were from North American sources (Canada and 
        Mexico) in 2008. And in fact, recent advancements in the 
        recovery of natural gas resources from unconventional 
        reservoirs like shale gas, coal bed methane, and tight gas 
        sands have led to wide consensus that our domestic undiscovered 
        technically recoverable reserves are well in excess of 1,000 
        trillion cubic feet. We do import a substantial portion of the 
        uranium we use for civilian nuclear power reactors. Forty-two 
        percent of those imports, however, are from Canada and 
        Australia.
          2) Electricity Prices are Stable: Electricity prices are 
        significantly less volatile than oil or gasoline prices. Over 
        the past 25 years, electricity prices have risen steadily but 
        slowly. Since 1983, the average retail price of electricity 
        delivered in the United States has risen by an average of less 
        than 2 percent per year in nominal terms, and has actually 
        fallen in real terms. Moreover, prices have risen by more than 
        5 percent per year only three times in that time period. This 
        price stability, which is in sharp contrast to the price 
        volatility of oil or gasoline, exists for at least two reasons. 
        First, the retail price of electricity reflects a wide range of 
        costs, only a small portion of which arise from the underlying 
        cost of the fuel. The remaining costs are largely fixed. In 
        most instances, the cost of fuel represents a smaller 
        percentage of the overall cost of delivered electricity than 
        the cost of crude oil represents as a percentage of the cost of 
        retail gasoline. Second, although real-time electricity prices 
        are volatile (sometimes highly volatile on an hour-to-hour or 
        day-to-day basis), they are nevertheless relatively stable over 
        the medium and long term. Therefore, in setting retail rates, 
        utilities or power marketers use formulas that will allow them 
        to recover their costs, including the occasionally high real-
        time prices for electricity, but which effectively isolate the 
        retail consumer from the hour-to-hour and day-to-day volatility 
        of the real-time power markets. By isolating the consumer from 
        the price volatility of the underlying fuel costs, electric 
        utilities would be providing to drivers of grid-enabled 
        vehicles (GEVs)--vehicles propelled in whole or in part by 
        electricity drawn from the grid and stored onboard in a 
        battery--the very stability that oil companies cannot provide 
        to consumers of gasoline.
          3) The Power Sector has Substantial Spare Capacity: Because 
        large-scale storage of electricity has historically been 
        impractical, the U.S. electric power sector is effectively 
        designed as an `on-demand system.' In practical terms, this has 
        meant that the system is constructed to be able to meet peak 
        demand from existing generation sources at any time. However, 
        throughout most of a 24-hour day--particularly at night--
        consumers require significantly less electricity than the 
        system is capable of delivering. Therefore, the U.S. electric 
        power sector has substantial spare capacity that could be used 
        to power electric vehicles without constructing additional 
        power generation facilities, assuming charging patterns were 
        appropriately managed.
          4) The Network of Infrastructure Already Exists: Unlike many 
        proposed alternatives to petroleum-based fuels, the nation 
        already has a ubiquitous network of electricity infrastructure. 
        No doubt, electrification will require the deployment of 
        charging infrastructure, additional functionality, and 
        increased investment in grid reliability, but the power 
        sector's infrastructural backbone--generation, transmission, 
        and distribution--is already in place.
          5) Electric Miles are Cleaner Than Gasoline Miles: Vehicle 
        miles fueled by electricity emit less CO2 than those 
        fueled by gasoline. Several well-to-wheels analyses conclude 
        that vehicles powered by the full and proportionate mix of fuel 
        sources in the United States today would result in reduced 
        carbon emissions. As renewable power increases its share of the 
        electricity portfolio, and to the extent that new nuclear power 
        comes on line, which I believe is important, the emissions 
        profile of the U.S. power sector and the GEVs powered by it 
        will continue to improve over time. Moreover, to the extent 
        that GEVs are charged overnight using power from baseload 
        nuclear or off-peak renewable power, their emissions footprint 
        can be nearly eliminated. In 2007, the Natural Resources 
        Defense Council and the Electric Power Research Institute 
        published a well-to-wheels analysis of several different 
        automotive technologies fueled by a range of sources commonly 
        used to generate power. Their analysis concluded that using a 
        PHEV would reduce carbon emissions as compared to a petroleum-
        fueled vehicle even if all of the exogenous electricity used to 
        charge the PHEV was generated at an old coal power plant. 
        Whereas a conventional gasoline vehicle would be responsible 
        for emissions, on average, of 450 grams of CO2 per 
        mile, a PHEV that was charged with power generated at an old 
        coal plant would be responsible for emissions of about 325 
        grams of CO2 per mile, a reduction of about 25 
        percent. Emissions attributable to the vehicle could be reduced 
        to as low as 150 grams of CO2 per mile if the 
        exogenous power was generated at a plant without carbon 
        emissions and ranged between 200 and 300 grams of 
        CO2 per mile if the power used was generated using 
        other fossil fuel generation technologies. In other words, no 
        matter where the power consumed by a PHEV is generated, the 
        overall level of emissions attributable to its operation is 
        lower than that of a conventional gasoline vehicle. The EPRI/
        NRDC study findings were consistent with a 2007 MIT study that 
        examined the same issue.

    In short, high penetration rates of GEVs could radically minimize 
the importance of oil to the United States, strengthening our economy, 
improving national security, and providing much-needed flexibility to 
our foreign policy while clearing a path toward dramatically reduced 
economy-wide emissions of greenhouse gases.
    No other alternative to petroleum can claim these widespread 
advantages. This is not to say that other alternatives have no role to 
play in a post-petroleum transportation sector. On the contrary. 
Natural gas, for example, may be used successfully in fleet vehicles, 
particularly those that can be centrally refueled, such as taxis, 
buses, specialized harbor and airport vehicles, and refuse-collection 
trucks. Even more importantly, natural gas will play a crucial role in 
providing electricity, a role in which it can be far more efficiently 
deployed than in actual vehicles. Other alternatives may also offer 
advantages in niche uses. But none offers the array of advantages that 
electricity does.
    The logical next question is how we can successfully devise and 
deploy an electrified transportation system.
    Here's what we need to avoid: it has now been more than 10 years 
since traditional hybrids were first introduced in the United States. 
And despite government support and record high gas prices for part of 
that time, there are still only 1.6 million of them on the road out of 
more than 250 million vehicles in the light duty fleet.
    We cannot let electric vehicles turn into another niche product. We 
cannot allow their use to be limited to environmentalists and 
technological enthusiasts. To make our nation's investment worthwhile--
and, more importantly, to truly combat our oil dependence--we must put 
ourselves on the pathway toward millions, then tens of millions, and 
then hundreds of millions of electric cars and trucks.
    It is not as simple as flipping a switch. Electrification on a mass 
scale is an enormously complex undertaking. The issue is not simply one 
of putting electric cars into showrooms. At the most basic level, the 
first commercially available EVs and PHEVs will be significantly more 
expensive than their internal combustion engine counterparts. The 
existing tax credits help offset that cost, but they hardly represent a 
transformative policy framework that will give consumers the necessary 
confidence to adopt a fundamentally new technology. For electrification 
to appeal to consumers, it will truly `take a village.'
    For example, drivers will want to know that installing a charger in 
their garage will be a seamless and simple process that isn't bogged 
down by weeks of red tape. For EV drivers, they will want access to 
some amount of public charging infrastructure so that they can feel 
confident as they complete a Saturday full of errands and shopping--or 
take the family on the highway for the great American road trip.
    The proactive engagement and support of utilities will be 
absolutely critical. Smart charging will make EVs and PHEVs an asset 
for the grid, but dumb charging will make them a liability. One 
analysis by EPRI found that plugging in just one PHEV to charge at 220 
volts overloaded 36 of 53 transformers examined during peak hours and 5 
of 53 transformers during off-peak hours. We are all excited about the 
benefits of using EVs and PHEVs to fill valleys in utility load curves, 
but this will only work if consumers have the ability to receive 
information that incentivizes them to charge their cars at night. Yet, 
most public utility commissions don't encourage or allow time of use 
pricing.
    The bottom line is that, for this technology to succeed, the 
vehicles will need a network of support--both in terms of regulations 
and infrastructure. Without that, they will be relegated to niche 
product status. Consumers will have poor experiences, many of the 3,000 
utilities in the U.S. will play an absentee role--at best--in the 
process, and we will have invested billions of dollars in a battery 
industry that finds stronger roots in Europe (where fuel prices are 
higher) and in China (where the public imperative is already stronger). 
We have to recognize that such a network of support does not currently 
exist in most places in the U.S.
    That is where this crucial legislation comes in.
    This bill would initiate a competition in which specific geographic 
areas would vie to be selected as large-scale deployment communities: 
areas in which all of the elements of an electrified transportation 
system are deployed simultaneously and at scale, thereby providing a 
crucial first step toward moving electrification beyond a niche product 
into a dominant, compelling, and ubiquitous concept. These deployment 
communities would be selected on a competitive basis. The most 
attractive regional bids would demonstrate a clear path to successful 
integration of GEVs, including:

    --A supportive regulatory environment that facilitates concepts 
            like utility investment in upgraded physical and IT assets; 
            time of use pricing; and a seamless process for permitting 
            and installing level II EVSEs in residential consumer 
            garages.
    --Support and participation from a broad swath of stakeholders, 
            including state and local governments, utilities, utility 
            regulators, large local employers, universities and others.
    --A diversity of business plans, allowing innovators and 
            entrepreneurs to explore the most effective and efficient 
            models for deployment.

    In sum, successful bids should be those in which all of pieces have 
been brought together--autos, infrastructure, favorable regulatory 
environment, interested consumers--to ensure that large scale 
deployment of GEVs has the best chance of success.
    Once selected, deployment communities would be eligible for 
amplified, targeted, and temporary financial incentives for consumers, 
infrastructure providers and utilities. The bill envisions in between 
five and 15 deployment communities in the first phase of the program. 
Within five years of the bill's enactment, the Secretary of Energy 
would be required to produce a report evaluating its success and 
justifying a decision to either expand to a second phase of additional 
cities or end the program. If fully implemented, the legislation would 
aim to deploy a total of 700,000 grid-enabled electric vehicles and 
their infrastructure in the first deployment communities over a five-
year period.
    We believe this approach is critical to avoiding the pitfalls of 
the past. These deployment communities would:

          1) Drive Economies of Scale: Concentrating resources in a 
        limited number of geographic areas will allow participants in 
        the GEV value chain to take advantage of economies of scale, 
        particularly with respect to the deployment of charging 
        infrastructure. Utilities will incur fixed costs to support the 
        operation of GEVs; those costs will be more affordable if 
        spread over a greater number of vehicles. Power providers also 
        can reduce the cost of charging infrastructure through 
        economies of scale. While it is unclear how many public vehicle 
        chargers will be necessary for a GEV transportation system to 
        operate smoothly in a given community, it is clear that some 
        public charging facilities will be needed. Previous pilot 
        studies demonstrate that the cost of installing charging 
        facilities can be reduced significantly when groups of 
        facilities are installed at once. Furthermore, these geographic 
        concentrations will stimulate demand for grid-enabled vehicles 
        at a rate that is likely to be far greater than if the vehicles 
        are simply purchased by early adopters scattered around the 
        United States. Early on in the process, this higher level of 
        demand will simply be the result of magnified consumer 
        incentives. Subsequently, as individual metropolitan areas gain 
        exposure to GEVs and confidence increases, adoption rates 
        should be measurably expedited.
          2) Demonstrate Proof of Concept Beyond Early Adopters: By 
        demonstrating the benefits of grid-enabled vehicles in a real 
        world environment, this deployment plan will make consumers, 
        policymakers and industry aware of the tremendous potential of 
        electrification of transportation. In general, consumers are 
        probably unaware that GEVs have evolved to the point where they 
        can meet most individuals' daily driving needs. In addition, 
        electric drive vehicles generally have faster acceleration and 
        operate more quietly than internal combustion engine vehicles. 
        They hold out the promise of offering drivers a wide range of 
        features, based on the electronic package in the vehicle, that 
        are beyond our imagination today in the same way that iPhone 
        applications would have been beyond our imagination a decade 
        ago. The problem is that consumers are not aware of the 
        opportunities presented by GEVs and are not yet convinced that 
        they can operate reliably and affordably at scale. 
        Concentrating investments and other efforts in a limited number 
        of communities will accelerate the opportunity to demonstrate 
        that grid-enabled vehicles can meet drivers' needs. In 
        addition, these projects will demonstrate that a community is 
        capable of putting the infrastructure in place, operating the 
        vehicles over their lifetimes, and disposing of them after 
        their useful life has ended, all in a manner that profits the 
        participants in the value chain.
          3) Facilitate Learning by Doing: While GEVs present a great 
        opportunity, their deployment also raises a number of 
        questions. Deploying large numbers of GEVs in concentrated 
        areas will allow for the collection of information and 
        experience that is needed to successfully deploy GEVs 
        nationwide. It will help automakers learn how much consumers 
        are willing to pay up front for a car that costs less to 
        operate and has a lower total cost of ownership over its 
        lifetime. It will allow utilities and charging station 
        providers to learn when and where drivers want to charge their 
        vehicles. It will allow utilities and other aggregators to 
        learn who can best sell power to drivers and what types of rate 
        structures meet both drivers' and utilities and aggregators' 
        needs. It will help determine whether there is a viable 
        business model for public charging infrastructure. It is clear 
        that for GEVs to succeed there must be a model in which each 
        party in the value chain is able to operate profitably, or in 
        which the government determines that, as a matter of public 
        policy, certain aspects of the system should be publicly 
        supported in a manner that facilitates further competition. 
        Deploying GEVs in a series of geographic regions around the 
        country where resources can be concentrated and data can be 
        collected and studied will ultimately accelerate wide-scale GEV 
        deployment. Therefore, rather than allowing the market to 
        develop scattershot across the country, it is critical that the 
        market be encouraged to develop at a deliberate pace in clearly 
        identified geographic regions in which a large number of 
        vehicles can be deployed in a relatively short period of time.

    Now, let me go into this idea of deployment communities a little 
more in depth.
    First, I'd like to talk about the competition.
    In order to be selected, a community will need to present a 
comprehensive proposal, similar to bids to host the Olympic Games. Such 
a proposal would need to show capability and buy-in from a wide range 
of public and private players, including local governments, utilities, 
major employers, and more.
    Cities and communities throughout the nation will be eligible to 
compete for selection as a deployment community. And the bill makes it 
clear that in selecting deployment communities, DOE should seek areas 
that are diverse regionally, geographically, climactically, in terms of 
their urban and suburban composition, size, typical commuting patterns, 
and type of electric utility.
    We believe we would also see an important diversity in the business 
models that innovators and entrepreneurs would present to explore the 
most effective and efficient models for deployment. Again, the 
advantage of a competitive, market-based plan like this is that the 
best ideas have the opportunity to rise to the top.
    We believe the result of passing this legislation will be a great 
competition, a race to the top as communities fight to present the most 
fertile ground for an exciting new technological rollout. Even those 
that are not ultimately selected will have, in order to compete, taken 
steps that will ultimately make the adoption and deployment of electric 
vehicles and infrastructure more achievable within their borders.
    We've already seen cities and other localities across the country 
taking the first steps toward electrification, whether it is installing 
charging infrastructure, buying the vehicles for city fleets, or some 
combination of both and more. They see the benefits and are eager to 
take the next step. If we pass this legislation, I think we will see 
cities once again, as they have in the past, playing the role of 
experimenters and leaders in this exciting new technology.
    Incidentally, let me address a concern that others have brought up 
about this very aspect of the deployment community idea: that it overly 
concentrates resources in a small number of communities.
    I strongly disagree with this criticism.
    First, these plans do nothing that would limit or impede the 
current nationwide incentives for electric vehicles. Today, a maximum 
tax credit of $7,500 on qualified electric drive vehicles exists 
nationwide. Additional credits exist for infrastructure. This bill does 
not in any way impact the maximum vehicle tax credit available to 
consumers nationwide. What we are talking about is added incentives, 
which will spur added demand. In fact, the goal of this legislation--
700,000 vehicles--represents higher penetration rates than the total 
currently announced North American electric vehicle production capacity 
for 2015.
    Second, the benefits accrue far beyond the deployment communities 
themselves. While money will flow into these communities, they should 
more correctly be thought of as funnels through which a substantial 
portion of the funds will flow on their way elsewhere around the 
country. Much of the money that flows through deployment communities 
will end up in the towns and cities where the vehicles and charging 
infrastructure and their components are manufactured. When a factory 
reopens in a depressed area to build or support these vehicles--as 
we've already seen in places like Elkhart, Indiana and Livonia, 
Michigan--that is a real and tangible benefit for hardworking 
Americans.
    Third, if this program succeeds, it will drive down costs for 
electric vehicles for consumers throughout the nation. It will also set 
the nation on a path toward greater energy security and economic 
prosperity through sharply reduced oil dependence. This effort is about 
building a new transportation system from the ground up in a fiscally 
responsible, competitive fashion. That's good for the entire nation.
    This leads us to another criticism: that what this bill proposes is 
just another demonstration project that may in fact end up being 
counterproductive, showing that electric vehicles and plug-in hybrid 
electric vehicles are not ready for prime time.
    My response to that is simply that it will not happen.
    Again, we are talking about 700,000 electric vehicles here, 
representing a significant percentage of all vehicles within the 
deployment communities. That is not a pilot project. That is a 
carefully-planned rollout for a major new technology at scale. All of 
the major automakers who have committed to electrification have adopted 
similar targeted rollouts, choosing specific communities, so clearly 
they see the value in careful planning.
    And let's look at the alternatives. Vehicles deployed in small 
pilot programs will likely end up solely in the hands of enthusiasts, 
whether environmentalists or people simply interested in new 
technology. While they should be able to get these vehicles, it is not 
enough. These vehicles must penetrate the market sufficiently to 
demonstrate that they can meet the needs of average drivers or they 
risk being relegated to niche status, as happened to hybrids, in which 
case their deployment would be too limited to make any meaningful 
headway toward our shared goal of reducing oil dependence. On the other 
hand, a widespread national rollout without careful planning will stall 
electrification before it has a chance to succeed. This approach is the 
happy medium, the one that allows us to build toward true penetration 
and scale in a responsible manner.
    The bill we are discussing today recognizes a simple fact: 
electrification will not move past niche product status without careful 
policy coordination designed to overcome early obstacles. Grid-enabled 
vehicles require a network to thrive--a network that includes 
regulatory support, some amount of infrastructure, and progressive 
utilities. There are very few communities where such an environment 
exists today. And this says nothing of the higher costs of purchasing a 
GEV and consumers' general uncertainty in adopting an unfamiliar 
technology.
    A targeted regional deployment program featuring a competitive 
selection process will sharply increase the number of places where a 
supportive GEV network exists. Strong financial incentives for vehicles 
and infrastructure in these regions will drive high concentrations of 
cars onto the road in a short period of time and help achieve scale in 
battery manufacturing. The program will drive businesses and investment 
into deployment communities and help create jobs. The consequences of 
this approach will be to associate GEVs with renewed economic growth in 
deployment communities while setting the stage for a broader rollout in 
phase two.
    Finally, let me say this: we understand that this is a challenging 
time for suggesting increased government expenditures for any project, 
no matter how worthwhile. We also, however, believe that certain 
aspects of the threat of oil dependence and the solutions we recommend 
make this a unique issue.
    First is the urgent national security threat posed by our 
dependence on oil. While we cannot and should not ignore costs, threats 
to national security have always occupied a unique place of priority in 
our budget considerations. And make no mistake: the dangers posed by 
our oil dependence are not theoretical. Our safety and security are 
threatened by oil dependence, and every single day that we do not act 
is another day that we remain vulnerable.
    Second is the economic cost of inaction. In the midst of a well-
supplied oil market and weak oil demand growth in developed economies, 
the United States is still on pace to run a $300 billion deficit in 
crude oil and petroleum products in 2010. At the same time, most 
analysts expect the medium and long term to be characterized by rapid 
oil demand growth in emerging markets coupled with weak increases in 
global oil production capacity. The result will be a return to tight 
oil markets and volatile oil prices in the future. The IEA expects this 
scenario to play out by 2014. Other analysts expect the crunch to come 
by 2011. In either case, the United States cannot wait to act.
    Finally, the environmental catastrophe unfolding in the Gulf of 
Mexico is making clear once again yet another aspect of the danger 
posed by our dependence. The longer we remain addicted, the more oil we 
will have to produce from more and more technically and environmentally 
challenging areas. The only way to turn from that dangerous path is to 
end our dependence. And the only way to do that is by ending oil's 
chokehold on our transportation system.
    Other energy policies have their strengths and may very well be 
worthwhile on their own merits and in the pursuit of their own goals, 
but if they do not include a detailed, well-defined pathway to a post-
petroleum transportation sector, then--for all of their other potential 
benefits--they will not have a significant impact on the economic and 
national security dangers posed by our oil dependence. If we do not 
answer that crucial question, then we are not addressing energy 
security in the way that we must to secure our future.
    The public is demanding action. Electrification is truly bipartisan 
not just here in Washington but across the country. Americans often 
agree on challenges more than solutions, but that is not the case here. 
This proposal is popular, and it is popular for a reason.
    This is no longer a question of technology. The technology is here, 
which is not something we can say with as much confidence about many of 
the other potential alternatives to petroleum. People are rushing to 
sign up to get in on the first wave of Nissan LEAFs. The Chevy Volt, 
the CODA, and other electric vehicles are on their way as well. But the 
technology is not enough. What we really need is the sustained 
commitment that will lead to a true transformation. It's simply a 
matter of organization, and--more importantly--a matter of national 
will and a matter of execution.
    Here is what I know, as the leader of a company that both depends 
on and helps to strengthen the mobility upon which our global economy 
is built: If we support this new path, if we build these deployment 
communities that are so crucial to jumpstarting a new, national 
transportation system, then that is a game changer. It is a game 
changer for businesses like mine, for employees, for consumers, for the 
economy, and for the country. A new future is ours for the taking, but 
only if we choose it and support it.
    Thank you for your attention.

    The Chairman. Thank you very much.
    Kathryn, go right ahead. We are glad to have you back here 
with the committee. Kathryn, of course, worked for Senator 
Domenici on the committee staff for many years.

    STATEMENT OF KATHRYN CLAY, PH.D., DIRECTOR OF RESEARCH, 
              ALLIANCE OF AUTOMOBILE MANUFACTURERS

    Ms. Clay. Thank you, Mr. Chairman. It is very nice to be 
back.
    Mr. Chairman, Ranking Member Murkowski, Senator Dorgan, and 
other members of the committee, good morning. My name is 
Kathryn Clay, and I am the Director of Research for the 
Alliance of Automobile Manufacturers. The alliance is a trade 
association made up of 11 car and light-duty truck 
manufacturers, including BMW, Chrysler, Ford, General Motors, 
Jaguar/Land Rover, Mazda, Mercedes-Benz, Mitsubishi, Porsche, 
Toyota, and Volkswagen. On behalf of the member companies of 
the alliance, I would like to thank you for giving me the 
opportunity to speak with you about S. 3495, the Promoting 
Electric Vehicles Act of 2010 sponsored by Senators Dorgan, 
Merkley, and Alexander.
    Automakers share the goals of reducing greenhouse gas 
emissions and enhancing energy security. We support a national 
economy-wide approach that will result in emissions reductions 
from all sectors with the least negative economic impact for 
the Nation.
    At the same time, we recognize our responsibility as 
automakers to help reduce emissions from the transport sector 
and to reduce our dependence on foreign oil. We have 
demonstrated our commitment by supporting the One National 
Program for greenhouse gas emissions and fuel economy standards 
for light-duty vehicles for the years 2012 through 2016 that 
was announced--the final version--earlier this year. The Energy 
Independence and Security Act of 2007, which originated in this 
committee, required a 40 percent increase in fuel economy 
standards by 2020. The One National Program accelerates this 
pace by 4 years, reducing oil consumption by a further 1.8 
billion barrels and lowering greenhouse gas emissions by an 
additional 950 million metric tons. Building on this 
commitment, automaker CEOs recently stood with the President 
announcing support for a new process for further standards from 
2017 through 2025.
    As part of this, automakers are committed to advancing 
electric mobility to meet these aggressive standards. Our 
member companies have announced plans to launch a range of 
electric drive vehicles, including plug-in hybrid, extended-
range hybrid, better electric and fuel cell vehicles in the 
coming model years.
    Before turning to the specific legislation at hand, let me 
address an issue that is critical to the deployment of electric 
drive vehicles in general, and that is the issue of how 
upstream emissions will be treated in future rulemakings with 
regard to electric drive vehicles.
    Until we significantly alter how we produce electricity in 
our Nation, including upstream emissions and the vehicle 
greenhouse gas standards will mean that electric vehicles will 
rate only marginally better than conventional internal 
combustion engines and comparatively worse than the 
conventional hybrids we have on the roads today. As a result, 
including upstream emissions creates a huge disincentive for 
producing electric vehicles versus less costly and less game-
changing technologies. This approach would also be unfair in 
that it would treat plug-in vehicles differently than other end 
uses of electricity, making vehicle manufacturers uniquely 
responsible for utility emissions, emissions over which 
automakers have no control.
    Turning now to the legislation, while we share the goal of 
the bill to promote electric drive vehicles and support many of 
the bill's provisions, we do disagree with key elements of the 
approach taken in S. 3495 and at this time cannot support the 
bill as written. Let me explain why.
    Our first major concern is that the legislation does not 
include fuel cell electric vehicles and related hydrogen 
infrastructure. The flexibility to invest in multiple electric 
drive pathways is important because hybrid, better electric, 
plug-in hybrid, and fuel cell vehicles each offer unique 
benefits in different vehicle segments.
    Our second major concern is that the deployment community 
approach would create a few big winners and far too many losers 
among communities across the Nation that have already expressed 
an interest in participating in the transition to electric 
drive. Trying to prejudge the market brings tremendous risk, 
and the problem is compounded if we make just a few large bets, 
particularly at such an early stage of electric vehicle 
deployment. A more inclusive approach would maximize the 
chances of success for our public investments overall even if 
this means that individual communities would receive lower 
levels of total funding on a case-by-case basis.
    The most efficient solution is to provide the Department of 
Energy's existing programs with significant funding increases 
to support a comprehensive national program. Key elements 
should include transportation electrification efforts already 
started through Recovery Act funding and the Clean Cities 
program.
    Let me close by noting the alliance support for a 
particularly important provision in our view included in the 
bill that would better align our Federal efforts across many 
agencies with our national goals for electric vehicles. 
Establishing an interagency electric drive working group would 
bring needed coordination to Federal programs and we further 
would recommend that the administration move as quickly as 
possible to follow this recommendation included in the 
legislation and to designate a single point that would serve as 
the lead office or lead official to direct the activities of 
the working group.
    We in the auto industry look forward to working with this 
committee and with the bill's sponsors to address the 
infrastructure and consumer acceptance issues that will be so 
important to the ultimate success of electric drive vehicles 
and their contributions to our national goals.
    Thank you.
    [The prepared statement of Ms. Clay follows:]

   Prepared Statement of Kathryn Clay, Ph.D., Director of Research, 
                  Alliance of Automobile Manufacturers

    Chairman Bingaman, Ranking Member Murkowski, and Members of the 
Committee, good morning, my name is Kathryn Clay and I am the Director 
of Research for the Alliance of Automobile Manufacturers. The Alliance 
is a trade association made up of eleven car and light truck 
manufacturers including BMW Group, Chrysler LLC, Ford Motor Company, 
General Motors, Jaguar/Land Rover, Mazda, Mercedes-Benz USA, Mitsubishi 
Motors, Porsche, Toyota, and Volkswagen Group. On behalf of the member 
companies of the Alliance, I would like to thank you for giving me the 
opportunity to speak with you about the industry views of S. 3495, the 
Promoting Electric Vehicles Act of 2010 sponsored by Senators Dorgan 
and Merkley. We commend the sponsors for their leadership on the issue 
of electric drive vehicle deployment. The Alliance looks forward to 
working with the Bill's sponsors, and the members of this Committee, to 
address important concerns we have with the legislation in its current 
form.
    Automakers share the goals of reducing greenhouse gas emissions 
(GHG) and enhancing energy security. We continue to support a national 
approach for an economy-wide GHG emissions reduction program that will 
result in GHG emissions reductions from all sectors at the lowest cost 
with the least amount of negative economic impact.
    At the same time, we recognize our responsibility as automakers to 
reduce emissions from our sector, and to reduce our dependence on 
foreign oil. We have demonstrated our commitment to this principle 
through our support of the One National Program to impose GHG emissions 
standards and increase fuel economy standards for light-duty vehicles 
for the years 2012 through 2016. This landmark agreement accelerates by 
four years the pace set in the Energy Independence and Security Act of 
2007, which required a 40 percent increase in fuel economy standards by 
2020. As a result, we will reduce our nation's oil consumption by 1.8 
billion barrels and lower GHG emissions by approximately 950 million 
metric tons. Moreover, automaker CEOs recently stood with the President 
in support of a process for new standards from 2017 through 2025.
    Meeting the diverse and challenging requirements of the 
transportation sector will only be possible through a portfolio of 
advanced powertrain technologies. Continued improvements to the 
efficiency of the internal combustion engine will play a significant 
role. But in the coming decades, the vehicle fleet will be much more 
technologically diverse, with growing proportions of flex fuel, clean 
diesel and electric drive vehicles on our nation's roadways.
    However, achieving the ambitious target of an economy-wide 83 
percent reduction of GHG emissions by 2050 will require electric drive 
vehicles to play a critical role, with hybrid, battery electric, plug-
in hybrid and fuel cell vehicles offering unique benefits in different 
vehicle segments. For this reason, we believe the legislation should 
allow manufacturers, fuel providers, and communities the flexibility to 
invest in multiple electric drive pathways, including fuel cell 
electric vehicle and related hydrogen infrastructure. In addition, we 
must recognize that future successes of electric drive vehicles will be 
enhanced by growth in today's hybrid electric vehicles, by establishing 
technical expertise and manufacturing capacity for batteries, motor and 
other key electronic components, and driving down their costs through 
production scale.
    In order for electric drive vehicles to contribute meaningfully to 
our transportation future, long term and consistent federal policies 
are needed to transition from a low volume niche market to sustainable 
high volumes. Achieving widespread acceptance of these technologies 
requires focused efforts to align regulatory efforts; develop a 
supporting infrastructure; provide research and development; and 
provide incentives for consumer adoption and remove other market 
barriers. Unfortunately, S. 3495 falls short of establishing the 
necessary elements for a comprehensive and sustainable approach. The 
Alliance submitted numerous comments to improve on the Bill that were 
not adopted. As a result, the Alliance is not able to support the Bill 
as written.
    As an industry, we have significant concerns about an approach that 
would limit investments to a handful of communities, particularly at 
such an early stage of electric vehicle deployment. This creates a 
small number of communities that would ``win'' and receive significant 
federal dollars while the rest of country loses out. Attempts to 
prejudge the market bring tremendous risks, and the problem is 
compounded by making just a few large bets. We need a long term 
``building block'' approach that will lead to a sustainable future for 
electrification--not a program that pits one community against another 
or one state against another in a limited competition for federal 
funding.
    Opening up the grant program to a larger number of communities, 
with wide regional representation, would avoid limiting automakers' 
potential customer base for these vehicles and maximize the chances of 
success for our public investments overall--even if this means that 
individual communities would receive lower levels of total funding.
    Automakers need consistent regulatory policies to move us toward 
our collective goal to expand penetration of electric vehicles on U.S. 
roads. One issue especially critical to this discussion is how upstream 
emissions will be treated in future policies and rulemakings. Until the 
U.S. enacts a comprehensive climate program that significantly alters 
how we produce electricity, electric vehicles will be only marginally 
better from a total greenhouse gas perspective than conventional 
internal combustion engines, and less beneficial than hybrids given the 
mix of fuels used to generate our current (and near term) supply of 
electricity.
    As a result, basing policy on including upstream emissions creates 
a huge disincentive for producing electric vehicles versus other less 
costly (and less game-changing) technologies. This approach would also 
be unfair in that it would treat plug-in vehicles differently than 
other end-uses of electricity, making vehicle manufacturers uniquely 
responsible for upstream emissions--emissions over which automakers 
have no control. This precedential policy would create an unlevel 
playing field among the regulated community and create additional 
barriers that will be counter-productive to market penetration of 
electric vehicles; a direct deterrent to the very goals that the 
legislation is trying to avoid and overcome.
    We believe that any strengthening of consumer incentives should be 
integrated into the existing program which currently provides up to 
$7,500 per vehicle and is based key on performance parameters related 
to battery size captured in existing law. This federal incentive 
promotes all types of plug-in electric vehicles equitably across all 
potential consumer segments. A single federal incentive program will 
avoid confusion and promote greater certainty with customers 
irrespective of where they live. Examples of strengthening the existing 
incentive include making it available to consumers at the point of 
sale, along with increasing the amount and number of vehicles to which 
it applies.
    Another measure lacking in the bill is ongoing funding for U.S. 
facilities for the production of critical electric drive components 
such as electric motors, electric drive transmissions, and advance 
battery components. Almost all of these critical components continue to 
be manufactured overseas and imported into the U.S. trading our 
dependency from foreign petroleum to critical electric drive 
components. We need legislation that focuses on long term investment in 
the U.S. to adequately compete with developing countries for the 
production of these components.
    The Bill would also ban landfill disposal of advanced technology 
batteries, which is not justified at this time. Provisions for the safe 
recycling and eventual disposal of advanced technology batteries need 
to be developed based on the best science. We propose that, in place of 
a ban, the recycling study required by the bill should be expanded to 
address recommendations for appropriate disposal of these batteries.
    A key way to move forward on infrastructure planning and consumer 
outreach is to build on the success of the existing Department of 
Energy programs. This work to expand electric vehicle infrastructure, 
particularly through the transportation electrification efforts started 
through Recovery Act funding and the electric drive vehicle activities 
under the Clean Cities program, should receive significant funding 
increases to support an expanded, sustained effort to enhance our 
national readiness for electric drive vehicles.
    For any technology to be successful it must be consumer driven, and 
a national program that helps the consumer with the most pressing need, 
residential charging, offers the best opportunity for sustainable 
growth and deployment of electric drive vehicles. Business models must 
be developed that will allow the private sector to deploy charging 
infrastructure in the full range of residential situations including 
high rise buildings, garden apartments, and town houses. A range of 
innovative solutions to address the challenges facing both residential 
and workplace charging should be funded and we believe the most 
efficient solution is to provide the Department of Energy's existing 
programs with significant funding increases to support a comprehensive, 
national program.
    S. 3495 would establish an Interagency Electric Drive Working Group 
to align federal programs with our national goals for electric drive 
vehicles. The Alliance supports this position, and believes that a 
strengthened interagency process would provide greater coordination of 
federal expenditures related to electric drive technologies and of 
regulatory efforts across the federal government. We further recommend 
that the Administration designate a lead official with the 
responsibility, and budget authority, needed to direct the activities 
of the working group. The Bill would also establish an Electric Fuel 
Task Force, which the Alliance believes would enable the private sector 
to engage collaboratively with the administration to address the 
challenges to large scale deployment of plug-in electric drive 
vehicles.
    Automakers are committed to advancing electric mobility. Our member 
companies have already announced plans to launch plug-in hybrid, 
extended range hybrid, battery electric, and fuel-cell vehicles in the 
coming model years, and are hard at work developing the next generation 
of electric-drive vehicles that will follow. We look forward to working 
with the Committee, Senator Dorgan, and Senator Merkley to address the 
infrastructure and consumer acceptance issues that will be so important 
to the ultimate success of these vehicles, and their contribution to 
our national goals.

    The Chairman. Thank you very much.
    Mr. Brian Wynne with the Electric Drive Transportation 
Association. Thank you for being here.

    STATEMENT OF BRIAN P. WYNNE, PRESIDENT, ELECTRIC DRIVE 
                   TRANSPORTATION ASSOCIATION

    Mr. Wynne. Thank you, Mr. Chairman, Senator Murkowski, 
members of the committee. I am Brian Wynne, the President of 
the Electric Drive Transportation Association. I am pleased to 
be here today to discuss S. 3495 and want to express our 
appreciation for the committee's ongoing support for electric 
drive and recognition of its role in a cleaner, more secure 
transportation future.
    The Electric Drive Transportation Association, founded in 
1989, is the cross-industry trade association promoting the 
advancement of electric drive technology and electrified 
transportation. EDTA members include leading and emerging 
vehicle, battery, and component manufacturers, as well as 
electricity providers, smart grid and infrastructure 
developers, and others. Collectively, we are building the 
advanced vehicles, green jobs, sustainable transportation 
options and energy independence that comprise the electric 
drive future.
    This committee has historically led the way on electric 
drive, most recently with the 2007 energy bill which 
established important programs and incentives to provide 
investments in electric drive, many of which were funded in the 
2009 Recovery Act.
    Industry is rapidly moving forward with plug-in electric 
drive vehicles and component production, creating the green 
jobs that are the foundation of a thriving 21st century 
economy. Plug-in electric drive vehicles are available today 
and multiple models of cars and trucks are entering the market 
in the next 2 years, including the GM Volt, the Nissan Leaf, 
the Mitsubishi i-MiEV, Toyota's plug-in Prius, the Smith 
battery electric, Ford Transit Connect plug-in hybrid trucks, 
Coda, Tesla, and THINK, all bringing battery electric sedans to 
the market--and others.
    In nearly every State, collaborative efforts between 
utilities, electricity infrastructure providers, governments, 
and automakers are already underway, developing vehicle and 
infrastructure plans.
    As set out in our action plan, EDTA supports a 
comprehensive push toward electric drive, including a national 
initiative to promote plug-in electric drive vehicles. We 
believe that regional deployment efforts are important as part 
of such a national effort.
    S. 3495 would establish a 5-year, $100 million national 
program to advance nationwide adoption of electric drive 
vehicles and also authorizes a $4 billion investment in 5 to 15 
deployment communities that would receive up to $5 million 
each. Both the national and localized deployment programs 
include important elements for advancing plug-in deployment, 
including stakeholder involvement, technical assistance, grid 
integration planning, and work force training.
    However, we believe that a greater emphasis on the national 
effort and a larger group of deployment communities will be 
more effective in building the national fleet than 
concentrating Federal resources in such a limited number of 
communities.
    Collaborative, localized deployment efforts are already 
underway with others planned. Plug-in vehicles are already in 
the national market and vehicle makers are moving forward with 
efforts to build national markets in the next 2 to 3 years. We 
would like to see the national electric drive effort support 
all of these efforts as they need it.
    Additional items that we support in plug-in electric drive 
legislation that I would like to highlight in this statement 
include, first, an emphasis on private in addition to public 
recharging infrastructure. Industry studies confirm that at 
least initially most charging of plug-in vehicles will be done 
at primary residences overnight. The next greatest opportunity 
for charging is at the workplace during the day. We believe 
that meeting these recharging needs should be an explicit 
priority for national and localized deployment efforts. We 
support directing additional research and technical assistance 
toward facilitating residential and workplace charging.
    Second, we support incentives for expanded investment in 
U.S. vehicle and component manufacturing which will help to 
bring the vehicle cost down while building U.S. competitiveness 
in global markets.
    Third, we support the bill's program to integrate plug-in 
electric drive in Federal fleets with funds for purchasing 
vehicles, as well as transparency and accountability for their 
use. We would also like to see a comprehensive approach that 
recognizes all of the electric drive technologies, including 
fuel cells and hybrids.
    Finally, we strongly support the bill's emphasis on 
consumer education and work force training which are also very 
important to a national effort to build a diverse national 
fleet of electric drive vehicles.
    We appreciate Senator Dorgan's history of leadership on all 
electric drive and his effort to achieve the right balance 
between national and more localized efforts. As the bill moves 
forward through this committee, we would like to work with the 
chairman and Senator Dorgan to ensure that finite Federal 
resources are apportioned in the most effective way to ensure 
the achievement of the goal that we share, a diverse national 
fleet of electric drive vehicles.
    I thank you for the opportunity and look forward to your 
questions.
    [The prepared statement of Mr. Wynne follows:]

    Prepared Statement of Brian P. Wynne, President, Electric Drive 
                       Transportation Association

    Good morning, Chairman Bingaman, Senator Murkowski, members of the 
committee. I am Brian Wynne, President of the Electric Drive 
Transportation Association. I am pleased to be here today to discuss S. 
3495 and want to express our appreciation for this Committee's ongoing 
support for electric drive and recognition of its role in a cleaner, 
more secure transportation future.
    The Electric Drive Transportation Association (EDTA), founded in 
1989, is the cross-industry trade association promoting the advancement 
of electric drive technology and electrified transportation. EDTA 
members include leading and emerging vehicle, battery and component 
manufacturers, as well as electricity providers, smart grid and 
infrastructure developers, and others advancing diverse technologies 
that will displace oil with electricity in transportation. 
Collectively, we are building the advanced vehicles, green jobs, 
sustainable transportation options and energy independence that 
comprise the electric drive future.
    Looking beyond the price of gas, the cost of oil dependence is 
increasingly unsustainable. The dollars spent on imported oil, the 
chronic--and acute--environmental impacts, as well as the economic and 
security challenges created by a transportation sector almost entirely 
dependent on a single fuel. These are all costs that we have been 
paying, and ignoring, for too long.
    We are here today because, as a nation, we have recognized the cost 
is too high. We need to embrace other options for the transportation 
sector. EDTA believes that a comprehensive effort to move away from oil 
dependence must include a national fleet of electric drive vehicles--
that is battery electric, hybrid, plug-in hybrid and fuel cells--in 
cars, trucks, low speed and non-road vehicles.
    With the leadership of this Committee, the Energy Independence and 
Security of 2007 established important programs and incentives to 
promote investments in electric drive, many of which were funded in the 
2009 Recovery Act. The Administration has also declared an ambitious 
goal for plug-in vehicles--1 million on the road by 2015.
    Industry is rapidly moving forward with plug-in electric drive 
vehicle and component production, creating the green jobs that are the 
foundation of a thriving 21st century economy. Plug-in electric drive 
vehicles are available today and multiple models of cars and trucks are 
entering the market in the next two years, including the Volt from GM, 
the Nissan Leaf, the Mitsubishi i-MiEV, Toyota's plug-in Prius, the 
Smith battery electric and Ford Transit Connect plug-in hybrid trucks 
and Coda's and Tesla's battery electric sedans.
    In nearly every state, collaborative efforts of utilities, 
governments and auto makers are already underway, developing vehicle 
and infrastructure plans.
    Based on the industry's work, with the support of key federal 
policies, we are standing on the cusp of transformational market entry 
of plug-in vehicles. And the choices made here can make the difference 
in how quickly we achieve our goals. Building on what we have achieved, 
what we have learned and what is required to realize the goal of an 
electric drive future; EDTA has identified in our Action Plan the key 
``next step'' actions for policymakers to achieve our shared goal of a 
diverse national fleet of electric drive.
    Moving forward, areas of critical emphasis for federal policy 
accelerating electric drive include: reducing market hurdles to address 
cost and infrastructure concerns; expanding U.S. manufacturing capacity 
for advanced vehicles and components; establishing coherent regulatory 
policies for vehicles and infrastructure; accelerating technology 
breakthroughs and promoting public and private outreach and education.
    EDTA supports a comprehensive push toward electric drive including 
a national initiative to promote plug-in electric drive vehicles. We 
believe that regional deployment efforts are important, as a part of 
such a national effort.
    S.3495 would establish a 5 year, $100 million national program to 
advance nationwide adoption of electric drive vehicle and also 
authorizes a $4 billion investment in 5 to 15 ``deployment 
communities'' that would receive up to $500 million each. Both the 
national and localized deployment programs include important elements 
for advancing plug-in deployment, including stakeholder involvement, 
technical assistance, grid integration planning and workforce training.
    However, we believe that a greater emphasis on the national effort 
and a larger group of deployment communities will be more effective in 
building the national fleet than concentrating federal resources in 
such a limited number of communities.
    Collaborative localized deployment efforts are already underway, 
with others planned. Plug-in vehicles are in the national market and 
automakers are moving forward with efforts to build national markets in 
the next 2 to 3 years. For instance, GM has already made plans for 
expanded national distribution in 2011.We would like to see the 
national electric drive effort support all of these efforts in real 
time.
    We appreciate Senator Dorgan's history of leadership on all 
electric drive and his effort to achieve the right balance between the 
national and more localized efforts. As the bill moves through this 
Committee, we would like to work with the Chairman and Senator Dorgan 
to ensure that finite federal resources are apportioned in the most 
effective way to ensure the achievement of the goal we share: a diverse 
national fleet of electric drive vehicles.
    Inside the national and deployment programs, we would like to work 
with you to ensure specific emphasis on private, in addition to public, 
recharging infrastructure. Diverse vehicle configurations (battery 
electric and plug-in hybrids with varying ranges) and diverse consumer 
needs will require flexible private and public recharging options. 
Industry studies confirm, however, that most charging of plug-in 
vehicles will be done at primary residences over night. The next 
greatest opportunity for charging is at the workplace during the day. 
We believe that meeting these recharging needs should be an explicit 
priority for national and localized deployment efforts. We support 
directing additional research and technical assistance toward 
facilitating residential and workplace charging.
    We also support expanded investment in U.S. vehicle and component 
manufacturing, which will help to bring vehicle costs down while 
building U.S. competitiveness in global markets.
    Title I of S. 3495 also promotes the adoption of plug-in electric 
drive in federal fleets with funds for purchasing vehicles as well as 
transparency and accountability for their use, which EDTA strongly 
supports. We would also like to see a comprehensive approach that 
recognizes all of the electric drive technologies, including fuel cells 
and hybrids, which will provide flexibility for meeting fleet needs 
while reducing oil consumption and helping to build markets for 
advanced vehicles, components and infrastructure.
    Consumer education and workforce training are also very important 
to a national effort to build a diverse national fleet of electric 
drive vehicles and we support their inclusion in national and community 
deployment programs.
    The following are comments on selected provisions of the bill:
Definitions
    In Section 3 definitions, the definition of charging infrastructure 
excludes property that is ``a building or the structural components of 
a building.'' While this is the current definition language in the 
federal tax credit for investment in alternative fuel refueling 
property, it is an exclusion that inhibits investment in electric 
recharging. Particularly in residential applications, recharging 
infrastructure will often be integrated into a building's structure. 
The exclusion should not be applied to electricity recharging 
infrastructure in the definition included here. We are also working to 
revise the tax credit language to reflect the scope of electric 
recharging.
Title II
    In Title II, S. 3495 authorizes $1.5 billion for advanced energy 
storage and other electric drive research and development, including 
secondary use application development and demonstration. We strongly 
support the expanded support for plug-in electric drive technologies 
and infrastructure, including grid integration advances.
    In the context of a comprehensive energy bill, we would also 
support a broader reauthorization of DOE`s Vehicle technology programs, 
along the lines of Senator Stabenow's bill, S. 2843, that would advance 
electric drive research, development and deployment across platforms 
and configurations.
Title III
    Title III establishes a utility planning process for plug-in 
electric drive vehicles under the Public Utility Regulatory Policies 
Act. As fuel and power providers, utilities need to identify demand and 
energy management and smart grid integration strategies. Protocols for 
the interaction of utilities and charging infrastructure entities will 
also need to be identified. The key is establishing the right balance 
between national standards for charging technologies and flexibility in 
business models. Our members are currently reviewing the Section 301 
federal regulatory directives to ensure that these are achieved.
    Regarding the bill's provisions prohibiting disposal of advanced 
batteries used in plug-in electric drive in landfills, we believe that 
this is more appropriately a study to identify specific environmental 
risks and the best options for safe recycling and ultimate disposal 
before an outright ban is imposed on all advanced batteries. In the 
interim, promoting secondary uses of automotive batteries and advanced 
materials will ensure that these batteries remain in use beyond their 
automotive life and their valuable components are recovered
    EDTA has called for the establishment of coordinated efforts 
between government agencies and between agencies and the multiple 
public and private stakeholders advancing electric drive. We support S. 
3495's establishment of a Technical Advisory Committee and Inter-agency 
Task Force to ensure that initiatives and investments that comprise the 
national effort are compounding efforts, advancing the overall goal of 
electrification.
    This is a critical moment for the industry and for advancing a 
transformative energy policy that displaces oil with electricity--in 
the near and long term. EDTA supports and is pleased to work with the 
Committee as you identify the best ways to achieve a national fleet of 
electric drive vehicles.

    The Chairman. Thank you very much.
    Next is Mr. David Friedman. He is Research Director with 
the Clean Vehicles Program of the Union of Concerned 
Scientists. So please go right ahead.

   STATEMENT OF DAVID FRIEDMAN, RESEARCH DIRECTOR AND SENIOR 
      ENGINEER, UNION OF CONCERNED SCIENTISTS, OVIEDO, FL

    Mr. Friedman. Thank you, Mr. Chairman and members of the 
committee. As you mentioned, I am a research director and also 
a senior engineer with the Union of Concerned Scientists.
    First, let me start off by saying that by 2050 we can 
effectively end the use of oil and other petroleum products to 
fuel the vehicles that run on the Nation's highways. We cannot 
end our oil addiction overnight, and it will take significant 
investment, but we do not really have any other choice. The oil 
disaster in the Gulf is only the most recent reminder of the 
cost of our oil dependence. Oil prices spiked 5 times in the 
last 40 years, and each time our economy suffered either a 
recession or a significant drop in growth. Our dependence on 
oil also harms our health and our economy through everything 
from local gasoline leaks to poor regional air quality and 
global climate change.
    Electric drive vehicles must be part of a path that 
effectively ends our addiction to oil by at least 2050. But 
these technologies are not a silver bullet. The problem of our 
oil dependence is too big and too complex to be addressed by 
anything but a mix of vehicle technologies, low-carbon fuels, 
and better travel choices for consumers.
    Effectively ending our oil addiction for highway vehicles 
by 2050 does mean that nearly every car and truck on the road 
must run on renewable electricity, hydrogen, or sustainable, 
low-carbon biofuels by the middle of this century. All of these 
technologies have suffered from our lack of a comprehensive, 
long-term policy. The result has been a mix of approaches over 
the past 40 years that has shifted from synthetic fuels to 
methanol to batteries to corn ethanol to fuel cells to 
cellulosic ethanol and now back to batteries. This cycle 
strands investments and fundamentally fails to deliver energy 
independence. Breaking this cycle will require both a 
comprehensive set of energy and climate policies that put a 
price on carbon and establish national requirements to 
effectively end America's oil addiction by 2050 and sufficient 
funding for research, development, and large-scale deployment 
of electric drive technologies.
    The Electric Vehicle Deployment Act is a significant down 
payment on this second step. Senator Dorgan and your 
cosponsors, Senator Alexander and Merkley, are to be commended 
for a bill that provides many of the resources needed to move 
these vehicles into the deployment fast lane.
    By increasing funding available for research, vehicles and 
infrastructure, and by making tax credits more accessible, the 
act will help address many of the technology and market hurdles 
that still need to be overcome, including the high cost of 
first generation plug-in hybrid and battery electric vehicles.
    Further, the bill's focus on a limited number of deployment 
areas helps ensure that taxpayer dollars will be used more 
efficiently. It simply makes more sense to spend money in an 
area that will serve tens of thousands instead of tens or 
hundreds of vehicles.
    Now, the potential impact of this bill will be further 
improved with some modifications and integration into a 
comprehensive national policy. The bill should be modified to 
provide an even playing field for all electric drive 
technologies, including expanding the coverage of the 
deployment community funds to include fuel cell electric 
vehicles and infrastructure in phase one and making vehicle and 
infrastructure tax credits more compatible between fuel cells 
and battery electric vehicles.
    The Senate bill clearly leaves the door open to support for 
fuel cell vehicles in phase two, but by then, State efforts on 
hydrogen risk atrophy while international efforts begin to 
accelerate. If the United States is to compete with Japan, 
Germany, and South Korea, which all have announced efforts to 
significantly ramp up fuel cell production, and if we are to 
ensure that electric drive vehicles are available in parts of 
the economy not well suited to batteries, we should not make a 
similar mistake now that was made 5 years ago when we failed to 
increase support for batteries and recharging infrastructure 
when hydrogen had all the buzz.
    The Senate bill should also be modified to further limit 
the number of deployment communities at least in the first few 
years. The 15 deployment communities in the Senate bill risk 
cutting the funds for one individual community in half. A 
smaller number to start also reduces the number of mistakes 
that would be repeated in parallel by so many different 
deployment efforts.
    Finally, the Senate and House electrification bills should 
be merged into a comprehensive national policy. Putting a cap 
on carbon will not only change the way we use energy, it also 
will provide revenue that we can return to consumers to invest 
in electric drive vehicles and infrastructure. This provides an 
alternative to the annual appropriations cycle which risks 
significant funding uncertainty especially with the current 
focus on deficits.
    We must also establish a national oil savings plan that 
requires savings of at least 7 million barrels of oil per day 
by 2030 and that requires the effective elimination of oil use 
by 2050. We will not end our oil addiction if we continue the 
cycle of passing new, but limited energy bills every few years.
    Finally, we must establish a robust renewable electricity 
standard to ensure that plug-in vehicles will not only cut oil 
use but will also dramatically lower emissions. As you have 
heard, without a more renewable grid and renewable hydrogen, 
electric drive vehicles will not deliver reductions in heat-
trapping gases compared to a conventional hybrid.
    Now, vehicle standards must count those emissions. The 
whole purpose of vehicle standards is to reduce the carbon 
emissions associated with vehicles. That is not the right place 
to incentivize these advanced technologies, but this bill does 
provide the exact type of incentives we need to move that 
technology forward.
    Thank you.
    [The prepared statement of Mr. Friedman follows:]

  Prepared Statement of David Friedman, Research Director and Senior 
          Engineer, Union of Concerned Scientists, Oviedo, FL

    Mr. Chairman and Members of the Committee, I appreciate the 
opportunity to testify before you today. I am a research director and 
senior engineer with the Union of Concerned Scientists (UCS). UCS is a 
leading science-based nonprofit that has been working for a healthy 
environment and a safer world for over 40 years.
    By 2050 we can effectively end the use of oil and other petroleum 
products to fuel the cars, trucks, and buses that drive on the nation's 
highways. We cannot end our addiction to oil overnight and it will take 
significant investment on the part of industry, consumers and 
government, but we don't really have any other choice. The disaster in 
Gulf of Mexico is only the most recent reminder of the cost of our oil 
dependence on our economy. Oil prices spiked 5 times in last 40 years 
and each time our economy suffered either a recession or a significant 
drop in growth. Oil was not always the sole cause, but it was always a 
significant contributor, including in the case of our most recent 
economic turmoil. In 2008 we were facing record high oil prices and the 
resulting expense of sending more than one billion dollars a day to 
other countries just to buy oil and other petroleum products. Our 
dependence on products made from oil also harms our health and our 
economy through everything from local gasoline leaks to poor regional 
air quality and global climate change. The stress on our nation will 
only grow worse as the world economy recovers and demand for petroleum 
products accelerates, along with rising oil prices.
    Electric drive vehicles, such as plug-in hybrids, battery electric 
vehicles, and fuel cell electric vehicles must be part of a path that 
effectively ends our addiction to oil by at least 2050. But these 
technologies are not silver bullets. The problem of our oil dependence 
and its associated impacts are too big and too complex to be addressed 
by anything but a mix of vehicle technologies, low-carbon fuels, and 
better travel choices for consumers.
    If we look only at vehicles and fuels, effectively ending oil 
addiction for highway vehicles by 2050 means that nearly every car and 
truck on the road must run on renewable electricity, hydrogen, or 
sustainable, low-carbon biofuels. That in turn means that, by 2040, at 
the latest, nearly every new light duty car or truck and most heavy 
duty trucks sold must run on electricity, hydrogen, or biofuels. Figure 
1* shows one example of a similar roadmap from the International Energy 
Agency. In this case, worldwide progress is about 10 years behind where 
the United States could be if we take a leadership role. Figure 2 shows 
an example of a technology portfolio from recent work by the National 
Academy of Sciences. In this case, gasoline use is dramatically reduced 
and ultimately eliminated by 2050 through the combination of improved 
vehicle efficiency from conventional technology and hybrids, aggressive 
adoption of biofuels, and vehicle electrification. While it will take 
many decades to address our oil addiction and our changing climate, 
policies must be put in place today if a future without oil is to 
become a reality.
---------------------------------------------------------------------------
    * Figures 1 and 2 have been retained in committee files.
---------------------------------------------------------------------------
    All of these technologies have suffered from our lack of a 
comprehensive, long term set of policy solutions. The result has been a 
mix of policy approaches over the past forty years that has shifted 
from synthetic fuels to methanol to batteries to corn ethanol to 
hydrogen fuel cells to cellulosic biofuels and now back to batteries. 
This cycle of shifting policy prescriptions must be broken. The rise in 
financial and policy support for one technology typically comes with a 
fall for the others, stranding investments and making it difficult for 
industry and venture capitalists to make long term investments of their 
own. Breaking this cycle will require at least two major steps:

          1. A comprehensive set of energy and climate policies that 
        put a price on carbon and establish national requirements to 
        effectively end America's oil addiction and cut the emissions 
        of heat trapping gases by at least 80 percent by 2050.
          2. Sufficient funding for research, development, and large-
        scale deployment of technologies that require little or no 
        petroleum and are responsible for little or no heat-trapping 
        emissions.

    The Electric Vehicle Deployment Act of 2010 is a significant down 
payment on the second step. This bill builds on tax credits, grants and 
other resources provided under the American Recovery and Reinvestment 
act to support plug-in hybrid vehicles and battery electric vehicles. 
Senators Dorgan, Alexander and Merkley are to be commended for working 
with the Electrification Coalition on a bill that provides many of the 
resources needed to move these vehicles into the deployment fast lane:

   By increasing the funding available for research, vehicles 
        and infrastructure, the Electric Vehicle Deployment Act of 2010 
        will help address many of the technology and market hurdles 
        that still need to be overcome. Upcoming plug-in hybrid and 
        battery electric vehicles will cost $15,000 to $20,000 more 
        than comparable cars, with home recharging costing $1,000 to 
        $2,000 per household. While these vehicles will be able to save 
        their owners as much as $8,000 over the vehicle life by 
        purchasing electricity at a cost equivalent to less than $1 per 
        gallon (compared to today's nearly $3 per gallon for gasoline), 
        consumers will still face a significant cost gap that will make 
        them less likely to try the new technology. The upfront costs 
        can come down, but only with added research and with increased 
        production volumes, both of which will be more limited without 
        this bill. Increasing the amount of money available and making 
        tax credits refundable or transferable opens the door to more 
        resources to increase those production volumes.
   By directing efforts to support training of service and 
        safety personnel, and changing local codes, standards and 
        zoning requirements, the bill will help remove non-financial 
        barriers. Further, the bill's focus on a limited number of 
        deployment areas helps ensure that taxpayer dollars will be 
        used more efficiently. If the deployment of electric vehicles--
        even plug-in hybrids that require less support--is more spread 
        out, more infrastructure will be needed, more people will need 
        to be trained in service and safety, and more state and local 
        codes, standards, and zoning requirements will need to be 
        changed. All of these needs require money, and it simply makes 
        more sense to spend that money in an area that will serve tens 
        of thousands instead of tens or hundreds of vehicles.
   By opening the door to longer term national technology 
        deployment goals, the bill will help provide increased 
        certainty to industry, investors, utilities, fuel providers, 
        and local, state and regional policymakers.

    To give us a better chance of getting on a path that can 
effectively end our oil addiction and cut heat-trapping gas emissions 
80% by 2050, some changes can be made to the Electric Vehicle 
Deployment Act of 2010 and it's House companion, the Electric Drive 
Vehicle Deployment Act of 2010. These bills must also be integrated 
into a comprehensive national climate and energy policy that puts a 
price on carbon. The needed steps should include:

   Expanding vehicle and infrastructure support for fuel cell 
        electric vehicles in Phase 1 of the program. Fuel cells do have 
        some existing support, thanks in large part to leadership from 
        Senator Dorgan, and the Senate bill clearly leaves the door 
        open to additional support for these vehicles in Phase 2, but 
        without additional support for deployment by then state efforts 
        on hydrogen risk atrophy while international efforts begin to 
        accelerate. An industry survey by the California Fuel Cell 
        Partnership points to plans to deploy nearly 3,500 fuel cell 
        vehicles, mainly in southern California. The vehicle levels are 
        expected to rise to about 25,000 between 2015 and 2017. But at 
        the same time, tax credits for fuel cell cars were cut in half 
        this year and, along with hydrogen infrastructure tax credits, 
        they expire by 2014, just as efforts are ramping up. Meanwhile, 
        Japan, Germany, and South Korea have all announced efforts to 
        significantly ramp up fuel cell vehicle production in the 
        coming years.\1\ If we are to compete across the spectrum of 
        electric drive vehicles that will be needed,\2\ the Senate bill 
        should be modified to provide an even playing field for all 
        electric drive technologies including:
---------------------------------------------------------------------------
    \1\ Japan is targeting about 2 million fuel cell vehicles by 2025. 
Given that their market is about 1/3rd of ours, that would be 
equivalent to about 6 million fuel cell vehicles by 2025 in the US. 
Hyundai-Kia report plans to reach 100,000 fuel cell vehicles in 2020, 
the sales equivalent of about 1 million fuel cell vehicles in the US. 
Reports also indicate Germany is targeting around 600,000 fuel cell 
vehicles by 2020, or the U.S. equivalent of about 2 million vehicles.
    \2\ Without dramatic breakthroughs, battery electric vehicles will 
be best suited to smaller vehicles and vehicles that primarily drive 
for relatively short distances in stop and go traffic. Plug-in hybrids 
dramatically expand the applicable range, but also benefit most from 
more urban driving and will continue to require petroleum until 
breakthroughs are achieved in biofuels. Fuel cell electric vehicles are 
well suited to filling in the gaps left by today's batteries, though 
progress is still needed to bring down costs and develop 
infrastructure.

          1. Expanding the coverage of the deployment community funds 
        to include fuel cell electric vehicles and the necessary 
        hydrogen infrastructure in Phase 1. Delaying support for 
        hydrogen and fuel cell electric vehicles will guarantee that 
        they will always be the ``technology of the future.'' Had we 
        expanded funding for plug-in vehicles five years ago when 
        hydrogen had the buzz, we would be must better prepared for 
        upcoming deployment. We should not make the same mistake now 
        that the media attention is focused on batteries.
          2. Eliminating the cut in the fuel cell vehicle tax credit 
        and shifting it from an expiration date of 2014 to a per-
        manufacturer cap of 300,000 vehicles as provided for plug-in 
        vehicles.
          3. Shifting the expiration date for hydrogen infrastructure 
        tax credits to at least 2017 to coincide with the charging 
        infrastructure tax credits.
          4. Adopting the refundable and transferable provisions 
        included for plug-in vehicles.

   Further limiting the number of deployment communities, at 
        least for the first few years. As with the House companion, the 
        Senate bill can help the set aside financial resources be used 
        more effectively by limiting the total number of deployment 
        communities. By allowing for up to 15 deployment communities, 
        the Senate bill risks cutting the available funds for an 
        individual community in half and losing some of the advantages 
        of the bill's cluster approach. Further, starting with a 
        smaller number of communities allows more learning, reducing 
        the number of mistakes that would be repeated in parallel by so 
        many different deployment attempts.
   Integrating the Senate and House electrification bills into 
        a comprehensive national climate and energy policy that 
        includes a price on carbon, creates a national oil savings 
        plan, and provides strong incentives to deploy renewable 
        electricity above current projections, including a robust 
        national renewable electricity standard.

          1. Financing the electrification of transportation will 
        require significant resources and tying much of that financing 
        to the annual appropriations cycle risks significant funding 
        uncertainty, especially with the current focus on deficits. 
        Industry will be less likely to partner with communities if the 
        funding needed for even larger scale deployment is left in 
        doubt. Putting a cap on carbon will not only spur investments 
        in cleaner technology and changes in the way we use energy, but 
        it will provide revenues that we can invest in clean energy 
        jobs. Covering the transportation sector can generate $20-$40 
        billion each year that can be returned to consumers to help 
        them purchase electric drive vehicles and home recharging or 
        refueling infrastructure, among other investments in 
        transportation.
          2. If our ultimate goal is to end our oil addiction, we 
        cannot continue the cycle of passing a new energy bill every 
        few years. To provide certainty to industry and to empower 
        agencies across the federal government, the Senate should 
        establish a national oil savings plan that requires savings of 
        at least 7 million barrels per day by 2030 and that requires 
        the effective elimination of oil use by 2050. This plan should 
        provide the President with sufficient authority to achieve 
        these goals.
          3. The success of electric drive is inherently tied to moving 
        our grid to renewable electricity. Recent analysis from the 
        Argonne National Laboratory shows that, with today's 
        electricity mix, plug-in hybrid and battery electric vehicles 
        do not deliver reductions in heat-trapping gases compared to a 
        conventional hybrid.\3\ Because these vehicles do provide 
        reductions compared to today's cars, their expansion in the 
        next decade or two will yield carbon benefits. But, if the grid 
        is not significantly cleaner by 2030, when conventional hybrids 
        will need to be ubiquitous, plug-in vehicles won't deliver 
        carbon benefits. A strong cap on carbon and a robust renewable 
        electricity standard can help ensure that plug-in vehicles will 
        not only cut oil use but also help to dramatically lower 
        emissions. Further, the expansion of renewable electricity can 
        go hand in hand with the creation of a supply of renewable 
        hydrogen for fuel cell electric vehicles. Hydrogen can be used 
        to buffer intermittent renewables to both lower the cost of 
        clean electricity and expand the fuel mix.
---------------------------------------------------------------------------
    \3\ Elgowainy, et. al., ``Well-to-Wheels Analysis of Energy Use and 
Greenhouse Gas Emissions of Plug-In Hybrid Electric Vehicles,'' AND/
ESD/10-1, June 2010.

    The U.S. needs to move away from a piecemeal approach to 
transportation, energy, and environmental policy and instead adopt a 
comprehensive set of policies that will tap into both the near term and 
long term solutions that are available now or on the drawing boards. 
This will require a longer term perspective and a combination of 
consistent, significant, and sustained policies. Yes, we do need to 
rethink our transportation system, but in doing so, we will not only 
dramatically lower global warming pollution, we will save consumers 
billions, create new jobs in America and ultimately cut our addiction 
to oil. The Electric Vehicle Deployment Act of 2010 is an important 
---------------------------------------------------------------------------
part of this comprehensive set of policies.

    The Chairman. Thank you very much.
    The final witness is Mr. Alan Crane with the National 
Research Council. Go right ahead.

 STATEMENT OF ALAN T. CRANE, SENIOR PROGRAM OFFICER, NATIONAL 
                        RESEARCH COUNCIL

    Mr. Crane. Thank you, Mr. Chairman, members of the 
committee. My name is Alan Crane and I was the study director 
for the report on plug-in hybrids that Senator Dorgan 
mentioned, also its predecessor report on hydrogen and fuel 
cells. These studies were intended to estimate the maximum 
practical rate at which alternative vehicle technologies could 
grow in the marketplace, the resources that would be required 
to make that possible, and the oil consumption and greenhouse 
gas reductions that might result.
    I would respectfully request that the plug-in report be 
included in the record for the meeting. Thank you.
    The Chairman. We will include that.
    Mr. Crane. I should note that this report did not consider 
fuel cell vehicles. It was limited to hybrids. It did not 
consider full electric vehicles, just the plug-in hybrids.
    We also examined biofuels and advanced fuel efficiency of 
conventional vehicles to compare the benefits of different 
approaches. None of these technologies, as has been mentioned, 
is likely to solve the problem all by itself, but collectively, 
as Dr. Friedman mentioned, they have the potential for 
eliminating oil use in the light-duty fleet by 2050.
    In the interest of conserving time, I would like to turn to 
the findings and conclusions at the end of my testimony, and I 
will elaborate on them slightly.
    To begin with, battery vehicles, whether they are hybrids 
or full electric, certainly have the potential to become very 
important, even a major component of the light-duty fleet, but 
that is not at all certain. There are several factors that may 
seriously limit the growth unless large subsidies are 
continued.
    For instance, battery costs are still high. You mentioned 
you think that our costs are higher than most. Actually the 
current costs are right in the middle of all the estimates we 
have seen once they are adjusted to the same basis. There is a 
lot of uncertainty as to how far and how fast battery costs 
will come down. We are probably on the high side, but still 
lower than several other estimates in the literature.
    Durability is also a major question. The range on the 
vehicle drops as the batteries degrade, which is usually about 
2 percent per year. If you have to replace the battery pack, 
that is going to be very expensive.
    Fuel savings are modest relative to the cost increment. A 
hybrid electric vehicle can do almost as well as a low-mileage 
plug-in hybrid, a 10-miler, say. As has been mentioned, the 
carbon savings are even smaller.
    Then a question that we could not really get into but was 
looming over everything was on the number of people who are 
able to plug in their vehicle and willing to take the time to 
do it.
    With that as a lead-in, our conclusion No. 1, the lithium-
ion battery technology has been developing rapidly. The costs 
are still high, and we did not see the likelihood of dramatic 
cost reductions unless there are some real breakthroughs in 
technology. Many of the projections that show a rapid drop 
depend upon manufacturing economies of scale. We noticed that 
lithium-ion batteries are already made in huge quantities in 
very efficient factories. The vehicles are not going to be 
radically different from that. So we suspect that technology 
will be a more important factor than economies of scale.
    The cost to a vehicle manufacturer we thought for right now 
would be--for instance, for the Volt, would be $14,000 to 
$18,000, somewhere in that range. That is more than a 
conventional non-hybrid vehicle. Most of that would be in the 
battery pack, and a 10-mile plug-in would be somewhere around 
$6,000, again about half of that for the battery pack. These 
are big numbers and they have to make you wonder whether people 
will find them worthwhile.
    In addition, some homes will require upgrade of their 
power, particularly in the garage. We did not include that in 
our estimates of the cost transition.
    We think that plug-in--the 40 miles of Volt types could 
become cost effective by 2040 or thereabouts. The shorter-mile 
ones would get there a lot sooner, but they will not save all 
that much fuel.
    We have also mentioned the rate at which we assumed that 
the plug-ins could achieve penetration into the market. We said 
40 million by 2030 was about the maximum. That is far faster 
than any other major technology has penetrated. So we do not 
think that is conservatively low. We think it is pretty 
optimistic.
    The factors that would interfere with that, the high cost 
of the battery, the modest gasoline savings, the limited 
availability of places to plug in, and other attractive 
opportunities for consumers are likely to keep this lower.
    Then the plug-ins--you need tens of millions of them out 
there. That is true of just about any new technology in order 
to have a real impact on the fleet. We have upwards of 300 
million vehicles in the fleet. It needs to be a high fraction 
of them to make a real impact on oil use. But certainly by 
2050, we can start making a big difference.
    Then the carbon savings, again, will depend upon how much 
we can decarbonize the fleet--decarbonize the generating mix we 
have in this country. I would add nuclear power to what Dr. 
Friedman mentioned.
    Finally, we cannot emphasize too much that we need to keep 
our options open. This has been said before. There are a lot of 
options for the future for cutting oil use. This is a major 
one, but there are others. Keep pushing on all of them.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Crane follows:]

 Prepared Statement of Alan T. Crane, Senior Program Officer, National 
                            Research Council

    Good morning, Mr. Chairman and members of the Committee. My name is 
Alan Crane. I was the study director for the National Research Council 
report Transitions to Alternative Transportation Technologies--Plug-in 
Hybrid Electric Vehicles and its predecessor report Transitions to 
Alternative Transportation Technologies--a Focus on Hydrogen. The 
National Research Council is the operating arm of the National Academy 
of Sciences, National Academy of Engineering, and the Institute of 
Medicine of the National Academies. The National Academy of Sciences 
was chartered by Congress in 1863 to advise the government on matters 
of science and technology.
    These two studies were requested by the U.S. Department of Energy 
to estimate the maximum practical rate at which alternative vehicle 
technologies could grow in the marketplace, the resources that would be 
required to make that possible, and the oil consumption and greenhouse 
gas emissions reductions that would result. Today I shall talk mainly 
about the Plug-in report which was released in final form recently. I 
would like to respectfully request that this report be included in the 
record.* Plug-in hybrid electric vehicles (PHEVs) and hydrogen fuel 
cell vehicles (HFCVs) have many similarities, and I shall provide some 
comparisons. I should note that the report did not consider full 
electric vehicles.
---------------------------------------------------------------------------
    * Report has been retained in committee files and can be found at 
http://www.nap.edu/catalog/12826.htm.
---------------------------------------------------------------------------
    The committee that conducted these studies also examined biofuels 
and advanced fuel efficiency of conventional vehicles to compare the 
benefits of different approaches. One of the most important conclusions 
of the committee in both reports is that a balanced portfolio of R&D 
options is critically important for the long-term future. None of these 
technologies by itself is likely to solve our oil problem, but 
collectively they have the potential to essentially eliminate oil use 
in the light duty vehicle fleet by 2050. However, achieving this 
objective will require a broad, well-funded R&D program and a long-term 
commitment to deployment by the federal government and industry.
    PHEVs and HFCVs differ from the biofuels and advanced efficiency 
options in that they probably will be too expensive, at least at first, 
to simply be mandated by standards. Government subsidies will be 
required to push them into the mass market.
    PHEVs can get an earlier start than HFCVs because batteries are 
more nearly ready for mass production than fuel cells, and fewer 
infrastructure changes are required. The committee estimated that the 
maximum practical penetration rate for PHEVs would result in 4 million 
on the road in a fleet of about 275 million light duty vehicles in 
2020, growing to 40 million on the road in 2030. This would require a 
rate of growth about twice that of conventional hybrid electric 
vehicles over the past 10 years.
    Batteries are by far the costliest component of PHEVs, and the rate 
at which costs can be reduced is uncertain. All proposed PHEVs will use 
lithium-ion (Li-ion) batteries, similar to the technology now used in 
laptop computers, power tools, and other small devices. Several Li-ion 
chemistries are under development with the objective of optimizing 
performance for automotive propulsion. None yet meet all essential 
goals for cost, battery life, and weight. Cost is expected to be the 
most difficult goal.
    The incremental manufacturing cost of a PHEV with a 10 mile range 
on its batteries alone (PHEV-10) over an equivalent conventional 
vehicle (non-hybrid) would be about $6000 now. A PHEV-40 (40 mile 
range) would cost about $16,000 more. These current costs are based on 
batteries ordered several years ago for installation in vehicles built 
in 2010 and 2011. Battery costs will decline significantly, but some of 
the other costs required for PHEVs (e.g. power electronics and electric 
motors) probably less so. Total incremental costs for PHEV-10s are 
expected to decline to less than $4000 and for PHEV-40s to about 
$10,000 by 2030.
    Dramatic cost reductions are not very likely without breakthroughs 
in battery technology. Lithium-ion batteries are already manufactured 
in great quantities, and those designed for vehicle applications are 
not greatly different from those for laptops. Thus cost reductions from 
manufacturing economies of scale will be limited. While the committee's 
estimates of future costs are higher than some (but not all) others, 
that may be because the committee assumed that durability and safety 
goals had to be met before cost goals. Today's lithium-ion batteries 
typically last three to four years, but at least 10 years will be 
required for a truly viable commercial PHEV. Batteries with shorter 
lifetimes would be less expensive, but would require replacement.
    DOE's R&D program is focused appropriately on cost reduction and 
performance improvement and on looking for breakthroughs. At this 
point, however, it is not clear what sorts of breakthroughs might 
become commercially viable. Furthermore, even if they occur within the 
next decade, they are unlikely to have much impact before 2030, because 
it takes many years to get large numbers of vehicles incorporating new 
technology on the road.
    In addition to costs, the necessity of charging the batteries 
essentially every day to deliver their promised fuel savings may be a 
constraint on PHEV growth. It is not clear how many people have a safe 
source of power, preferably in a garage, and the willingness to plug it 
in regularly.
    If PHEVs meet the maximum practical penetration rate, the savings 
in oil and carbon emissions will be significant. PHEV-40s could cut 
gasoline use by 55 percent by 2050, and PHEV-10s by 40 percent, 
relative to a reference case with no PHEVs or increased efforts on 
other technologies. However, much of this improvement could also be 
gained from improved efficiency of conventional vehicles and hybrid 
electric vehicles (HEVs). The high efficiency scenario analyzed by the 
committee, with a high fraction of HEVs, also showed a reduction of 40 
percent in gasoline use. A PHEV-10 is expected to save 19 percent of 
the gasoline that an equivalent HEV would use, while a PHEV-40 would 
save 55 percent.  In comparison, HFCVs directly reduce gasoline use 
because the hydrogen will be produced from natural gas or other non-oil 
sources.
    PHEVs show less improvement in GHG emissions than in gasoline 
consumption because of the additional emissions from electricity 
generation. If carbon emissions from the electric sector are limited, 
the reductions would be greater, potentially almost following the rate 
of reductions in gasoline use.
    The PHEV projection considered only the impact of a given number of 
PHEVs regardless of cost. PHEVs will be expensive relative to 
conventional vehicles, but they are cheaper to operate (driving costs 
per mile are less than for conventional vehicles), and eventually 
vehicle costs may decline sufficiently to achieve life-cycle cost 
competitiveness. A transition period with substantial policy 
intervention and/or financial assistance for buyers from government and 
possibly manufacturers will be necessary until the higher costs of 
PHEVs are balanced by their fuel savings.
    Transition costs will depend on how fast vehicle costs decline. At 
the rate considered to be optimistic by the committee, subsidies of 
over $400 billion could be required for PHEV-40s. However, if DOE's 
ambitious goals for battery cost and durability are met by 2020 only 
$24 billion would be required. Higher oil prices also would lower 
transition costs. PHEV-10s would achieve competitiveness sooner than 
PHEV-40s, but the oil savings would also be less. This analysis was 
based on battery packs that would be required for mid-size cars which 
are likely to be smaller than the average that will be used in the 
entire fleet.
    Because of uncertainties in battery pack costs at this point in the 
initial commercialization of PHEVs, the committee feels that it is 
important that the cost issues be reevaluated in 3 or 4 years after 
industry has some commercial experience with the technology.
    Following are the major conclusions of the committee. These are 
explained more thoroughly in the summary of the report.

          1. Lithium-ion battery technology has been developing 
        rapidly, especially at the cell level, but costs are still 
        high, and the potential for dramatic reductions appears 
        limited.
          2. Costs to a vehicle manufacturer for a PHEV-40 built in 
        2010 are likely to be about $14,000 to $18,000 more than an 
        equivalent conventional vehicle, including a $10,000 to $14,000 
        battery pack. The incremental cost of a PHEV-10 would be about 
        $5,500 to $6,300, including a $2,500 to $3,300 battery pack.
          3. PHEV-40s are unlikely to achieve cost-effectiveness before 
        2040 at gasoline prices below $4.00 per gallon, but PHEV-10s 
        may get there before 2030.
          4. At the Maximum Practical rate, as many as 40 million PHEVs 
        could be on the road by 2030, but various factors (e.g., high 
        costs of batteries, modest gasoline savings, limited 
        availability of places to plug in, competition from other 
        vehicles, and consumer resistance to plugging in virtually 
        every day) are likely to keep the number lower.
          5. PHEVs will have little impact on oil consumption before 
        2030 because there will not be enough of them in the fleet. 
        More substantial reductions could be achieved by 2050. PHEV-10s 
        will reduce oil consumption only slightly more than can be 
        achieved by HEVs.
          6. PHEV-10s will emit less carbon dioxide than nonhybrid 
        vehicles, but save little relative to HEVs after accounting for 
        emissions at the generating stations that supply the electric 
        power.
          7. No major problems are likely to be encountered for several 
        decades in supplying the power to charge PHEVs, as long as most 
        vehicles are charged at night.
          8. A portfolio approach to research, development, 
        demonstration, and, perhaps, market transition support is 
        essential.

    This concludes my statement. Thank you for the opportunity to 
testify. I would be happy to address any questions the Committee might 
have.

    The Chairman. Thank you and thank you all for your 
excellent testimony.
    Let me start with a few questions. Mr. Smith, let me start 
with you. You, I think, indicated that your FedEx fleet of 
vehicles is about 85,000, and I think someone had mentioned 
that the Federal Government--I believe maybe Mr. Sandalow 
mentioned that the Federal Government purchases about 60,000 
vehicles a year.
    In your effort as a large fleet operator and owner, what 
are you doing at FedEx with regard to transitioning to electric 
vehicles that you believe the Federal Government ought to be 
doing?
    Mr. Smith. Senator, we several years ago, along with the 
Eaton Corporation and the National Resource Defense Fund, 
developed the first walk-in pick-up and delivery hybrid truck. 
We now have about 400 of them. We will have about 400 of them 
at the end of the year.
    The problem with that vehicle is that its capital 
acquisition costs are significantly over a conventionally 
powered diesel truck, and you have to get up to about $4.50/
$5.00 a gallon in diesel cost to get an ROI. Now, there are 
some exceptions where you have to have low emission-vehicles to 
meet regulatory standards like California. So we will be 
putting the hybrid trucks out there.
    The reason they are so high in expense are, one, the 
battery cost, but in addition, the hybrid obviously has two 
power plants. It has the conventional power plant and it has an 
electric power plant. So for pick-up and delivery operations, I 
suspect that in most cases--now, perhaps not in Montana or 
upstate Maine where you have long distances between stops, but 
in most urban environments, the all-electric plug-in has a 
greater potential than the other technologies. As I mentioned, 
we have about 15 all-electrics in Europe made by Modec, and we 
have got about a half a dozen. We have taken delivery on 
prototypes that are a JV by Modec and Navistar built in 
Illinois and powered by A123 battery systems.
    The things that are in this legislation will move the 
production costs of the lithium batteries significantly down 
the cost performance curve. The operating costs of the all-
electric is so compelling compared to the diesel powered. It is 
about 20 percent per mile of what the diesel powered vehicle 
is. So it is strictly a matter of getting to scale production 
and hopefully having some of these technical breakthroughs on 
the battery technologies.
    In talks with people overseas and here and at ARPA Energy 
with some of the programs they have got going over there, I 
think the potential for increased price performance on the 
batteries is pretty significant in the next few years. So we 
respectfully disagree with the information that was put in the 
Research Council's report.
    The Chairman. Let me ask one other question. Dr. Clay, let 
me ask you. You, I think, in your testimony talk about the need 
for funding for production of components of electric vehicles. 
We put in law this section 136 in the 2007 energy bill, and it 
is intended to provide help to component suppliers. Why is that 
not adequate to meet the need for component suppliers for 
electric vehicles, just like it does other vehicles?
    Ms. Clay. Thank you, Mr. Chairman. In fact, yes, the 
alliance does support the provision that is in your legislation 
that passed out of committee that would extend and replenish 
that section 136 program. Our feeling is that would be 
sufficient and would meet the points that were made in our 
written testimony.
    The reason we included them in our written testimony was 
because this was introduced as standalone legislation, we felt 
that that was a very important component of meeting the overall 
need to produce electric vehicles, anticipating that this 
legislation might be folded into a larger energy package that 
would have your provision in the underlying text would be 
sufficient.
    The Chairman. Thank you very much.
    Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    In the focus on electrification, I think just about all of 
you at one point in time have discussed the need to reduce our 
emissions, and yet we recognize that we are in a Nation where--
I was trying to get he exact figure here in terms of how much 
of our electricity is produced today in this country by coal, 
by fossil fuels, and a recognition that in certain parts of the 
country, we moved to electrification where our source for 
electricity is coal. Have we really reduced the level of 
emissions? Dr. Clay, you mentioned it. Mr. Crane, you mentioned 
the push to decarbonizes the fleet, and I think it is an 
important part of the discussion.
    Mr. Smith, I would ask you. Within your nationwide fleet, I 
think you mentioned California was one State, one area, where 
you are focusing. But in your decision as to where you are 
deploying your electric fleet vehicles, do you look to the 
electricity source as part of your business judgment decisions, 
or is that factored in at all?
    Mr. Smith. No, it is not factored in. But I would point 
out, Senator, our studies would indicate that plug-in electric 
vehicles, even if powered by coal power plants that have not 
been modified to clean up the emissions on a so-called well-to-
wheel basis produce significantly less CO2 emissions 
than conventionally powered vehicles. Now, if the power source 
is hydro, geothermal, nuclear, solar, wind, so much the better. 
But there is a net benefit even with coal-powered plants.
    Senator Murkowski. Let me ask--and I mentioned in my 
opening statement the point about the technology-neutral 
perspective. Again, I think most of you have discussed some 
aspect of that.
    This legislation is set to authorize about $6 billion for 
the electric vehicle technologies. Recognizing that you are 
going to be seeing a--I mean, that is a substantial increase in 
funding. How do you believe that this will affect or impact the 
development of other technologies, whether they are--some of 
you mentioned, I think, the hydrogen, certainly natural gas, 
the advanced internal combustion. Is this a situation where by 
directing funding in this area, we lose the push in other 
areas? Or as Senator Dorgan has said, we need to make sure that 
we are doing it all, that we support the hydrogen vehicles, 
that we push evenly. I am throwing this out to all of you. Mr. 
Friedman and then Mr. Wynne.
    Mr. Wynne. Senator, I would be delighted to answer that 
question. I think it is really an excellent one.
    One of the reasons why ETA changed its name several years 
back was because of the fact that we are really pushing a 
technology here. It is not just vehicle-centric. This is 
technology-centric. So anything that we can do to advance the 
component manufacturing--for example, there are many components 
that are shared in the electric drive train. So we think of 
electric drive--fuel cells are just a different way to create 
the electricity. They do so on board utilizing hydrogen as a 
carrier. It is important to understand the way those dots 
connect over time, that this is not really an either/or 
situation.
    Having said that, we have made massive advances with 
battery technology and energy storage has always been the game 
here. We all know that electric motors are better than 
combustion engines. They are much more efficient, and 
increasingly because we have hybridized with faster 
microprocessor speeds and software, we can get more than one 
drive train to work better, to work together, and optimize the 
energy use in that vehicle. You have the opportunity to apply a 
technology over multiple applications. Electrification of the 
fleet I think gets us to where we want to go over time.
    The last point simply is that because hybrid technology is 
very flexible, you can utilize it with other biofuels, et 
cetera, and even natural gas.
    Senator Murkowski. Mr. Friedman, you wanted to jump in.
    Mr. Friedman. Yes, thank you Senator. I think both yourself 
and Senator Dorgan are right. We do have to, A, incentivize all 
of these technologies and ensure that there are resources out 
there for all of them. I think with a relatively small change 
to Senator Dorgan's bill, we could add hydrogen fuel cell 
vehicles and infrastructure into the mix early on. But this 
really has to be thought of as a down payment. We need a 
national investment to get ourselves off of oil and to 
eliminate carbon emissions. I think your argument before about 
the concern over near-term emissions really reinforces our need 
for a strong, renewable electric standard and to put a cap on 
carbon.
    In the near term, I am not very concerned. As Chairman 
Smith mentioned, in the near term, the emissions will be better 
than conventional vehicles. But by 2030, there should be a 
hybrid car in every single garage, and that needs to be the new 
status quo. So we are going to need clean electricity in order 
to get there.
    We did a study, a Climate 2030 Blueprint, that said that we 
could nearly decarbonize our electricity sector by about 70 
percent by 2030 through a combination of cap and trade and 
complementary policies. With that full sweep, we could actually 
save households on the order of $900 a year by that, and that 
is money that can be reinvested in a lot of these technologies 
to electrify our future and to green our electric grid.
    The Chairman. Senator Dorgan.
    Senator Dorgan. Mr. Chairman, thank you.
    Let me first deal with this hydrogen fuel cell issue. 
Because I chair the subcommittee on appropriations that funds 
all these things, let me just say to you we have a well 
established hydrogen fuel cell technologies program that 
received $174 million last year. I and Senator Domenici on this 
committee were strong supporters. I am a strong supporter of 
hydrogen fuel cells. I have no problem if somebody wants to add 
something here with respect to hydrogen fuel cells, but I do 
not want anybody to suggest we are not doing anything on that 
front. I added back all hydrogen fuel cell funding last year 
and will again this year. We want to promote all alternative 
transportation technologies, and hydrogen fuel cells are 
important. But I don't think the technology will be available 
for rapid near-term deployment. The technology that is ready 
for rapid near-term deployment is electric vehicles. So I do 
not want to talk about that anymore. We have strong support for 
hydrogen fuel cell vehicles.
    But let me ask Mr. Smith. Some people say--and as you know 
politically it is increasingly said--Government is the problem 
not the solution. Why do you not get out of the way, 
Government? So let us assume that you are out there running 
FedEx and you decide--you know what? We do not need Government. 
If I want an electric vehicle, I will go try and persuade 
somebody to build one. If I need a battery that goes enough 
miles for my fleet, I will try to persuade somebody to build 
one. Is that a satisfactory approach, or is this the kind of 
larger, game-changing thing that needs direction, needs policy 
choices that only the Government can really make, along with 
the support of the private sector?
    Mr. Smith. I think the Government needs to be involved, 
Senator, for two very important reasons.
    The first, as I mentioned in my remarks, this is an 
enormous national security problem. I mean, we have two 
shooting wars going on, and there is no question that at least 
in part they were precipitated by our dependence on imported 
foreign petroleum, great cost in money to the country, but far 
more importantly, over 5,000 of our youngsters' lives were lost 
in these situations.
    So other than nuclear proliferation and weapons of mass 
destruction getting in the hands of terrorists, it is our 
biggest single national security issue. As was mentioned in 
testimony, five times since the first Arab oil embargo, the 
country has been thrown into recession because of precipitous 
run-ups in fuel prices. In 2008 in the summer, a barrel of oil 
went up to $147 a barrel. It literally was the match that lit 
off the financial meltdown. So that is reason No. 1.
    The second reason is that the Government many times in the 
past has funded a technology that had great potential societal 
benefit but where the private sector simply could not put the 
funds in because the return on investment was too uncertain or 
the horizon was too far out or the funds required were too 
great. Two of them come to mind.
    One of them, which we are utilizing right now in front of 
us, is the Internet. I mean, that was funded by the Defense 
Advanced Research Projects Agency as a distributed 
communications system in the event of a nuclear war. Who could 
have imagined what could have come from that?
    But my other favorite example is aviation. I mean, today we 
take it for granted that you can put 100 tons of cargo on one 
of our triple 7s and fly it nonstop from Hong Kong to 
Indianapolis or Memphis, which we do every day. Just go back in 
the early part of the 20th century and look at the airplanes 
that were being flown and think about someone looking at those 
fabric-covered Jennies and DH-4s and things like that and fast 
forward to a triple 7 airplane.
    The Government funded the R&D in the aviation business by 
paying for air mail contracts, and finally in the middle part 
of the 1930s, the Douglas Aircraft Company finally made an 
airplane, the DC-3, C-47 in military terminology, that could 
make money with a passenger payload and some air express on it. 
But absent the Government moving toward that, it is very 
unlikely that aviation would have reached that in the near 
term.
    So given the national security issues and a market that is 
not a free market, the prices in the oil market are set by a 
cartel, OPEC, which if they did what they do in the United 
States, it would be found to be illegal.
    So national security issues, and the role of the Government 
in funding promising R&D where there is a general consensus 
that if we really get this right, like commercial aviation or 
battery technology. So I think it is very appropriate for the 
Government to be involved in this.
    Senator Dorgan. Mr. Chairman, might I ask one additional 
question?
    The Chairman. Sure.
    Senator Dorgan. Let me just say that the aviation 
technology has, in very large part, come from Federal 
investment into military airplanes. It migrates to the 
commercial sector from all of the major manufacturers.
    Mr. Crane, the battery costs that you used in your study, 
which was not very positive toward electrification, seemed very 
high. Nissan has announced pricing now for their electric Leaf, 
all-electric Leaf, $32,780 before the tax credit. So the Leaf 
is now going to be priced at $32,780 and has a 2-kilowatt-hour 
battery which, according to the estimates you used, would have 
cost $42,000, which is more than the price of the entire car, 
by far. So does that imply or suggest somehow that the battery 
estimates you have produced is off the mark?
    Mr. Crane. We did not look at the Leaf or what Nissan was 
doing, and I do not know their pricing policy. They are quoting 
prices not costs, and the two are not necessarily closely 
coupled.
    I just saw the Smart 2 is bring out an electric vehicle 
later this year which will have a range of 82 miles, I think. 
That is a tiny, little, bouncy thing you see around town. The 
lease they are asking is like $599. That is up on the luxury 
car level. Yet it is a relatively small battery. Again, I do 
not know what their pricing policy is, but that is not a real 
auspicious omen for electric vehicle costs.
    So we may be wrong. I do not know. I think we had reasons 
for coming up with what we did, though.
    Mr. Friedman. Senator Dorgan, a quick addition. One of the 
new things in that report is a calculation of the costs if the 
Department of Energy goals are met, which I think is more in 
line with what some of what Nissan is talking about. The report 
shows that if that happens, the costs go down dramatically. If 
I am right, I think it shows that they could become cost 
effective or break even by about 2025, much earlier, if those 
technology goals are met. So there is clearly the potential for 
much lower costs as the technology research progresses.
    The Chairman. Senator Corker.
    Senator Corker. Thank you, Mr. Chairman, and thank you for 
your testimony and I certainly welcome Mr. Smith who is a major 
employer in our State and someone who has I know worked with 
Senator Dorgan and many others to advance energy in this 
country.
    I am going through the financial reg right now and it is 
amazing to me the things that get added onto a bill in the name 
of financial regulation. It is an amazing thing that occurs, 
and I have noticed, in listening to all the panelists, that in 
lieu of maybe focusing on just plug-in electric only, that 
maybe many of the panelists feel like that other things should 
benefit from this, other types of technologies. My guess is by 
the time a bill gets to the floor and parochial issues take 
place, this bill may end up looking very different than it 
might coming out this committee. I know it is going to be 
linked up at some point with a credit bill. I know this is not 
in the jurisdiction of this committee.
    But I wondered, Mr. Smith, if you might add some cautionary 
advice, if you will, to the committee as it relates to this and 
its narrow focus. I know there have been comments made about 
picking winners and losers. I know you are as much a free 
market person as there is in this country. Senator Dorgan I 
think will use your comments in other venues down the road, I 
might add, about Government involvement that might involve 
other aspects of Government involvement.
    But do you want to make some editorial comments regarding 
how narrow this should be and what we should protect against as 
this bill moves to the floor?
    Mr. Smith. Senator, good to see you. It is a very important 
point that you make.
    I go back to the comments I made about the formation of the 
Energy Security Leadership Council. That group came together 
because the CEOs and the retired generals and the admirals felt 
that we should focus on one particular problem, the dependence 
of the United States on imported petroleum from hostile parts 
and unstable parts of the world. So the recommendations that we 
came up with were very focused and very narrow, and as I 
mentioned, I think were a big part of the 2007 Energy 
Independence Security Act, as I recall it.
    In this particular case, the Electrification Coalition, 
which grew out of the ESLC, is focused on one thing and one 
thing only, and that is to incent the scale production of 
electric vehicles to reduce the petroleum inputs in our economy 
and thereby reduce our dependence on foreign petroleum. I think 
once you start making it a Christmas tree, you really reduce 
the potential advantages of moving this technology which is not 
theoretical. I venture to say everybody in this room has a 
communications device, a BlackBerry, an iPhone, a Droid or 
whatever the case may be that is powered by this exact 
technology.
    I am reminded of a favorite story by Dr. Hans Selye who was 
a Nobel laureate, and he used to tell the story about himself 
when he was a young researcher, how irritated he would get that 
his Petri dishes would be gunked up with this green stuff when 
he was not just pristine about it, and of course, what he was 
looking at was penicillin. But he just could not make the 
conceptual leap that that stuff in his Petri dishes was 
something that was very beneficial. A few years later, Dr. 
Fleming did introduce penicillin to the world and it 
revolutionized medicine.
    So I think the incredible focus on battery technology by 
many different entities around the world, China, Korea, Japan, 
the United States, makes it a much more likely technology to 
get behind and move forward like aviation in the example I did.
    So I feel very strongly the pure R&D on fuel cells and 
those sort of things should be funded in a pure R&D manner. But 
the electrification bill should be toward electrifying light-
duty transportation. Period.
    Senator Corker. So the vision, especially coming from where 
I come from, of baseload nuclear energy in the evenings when it 
is not being utilized as much charging electric batteries is 
just a vision that excites me. It excites you. It excites 
Senator Alexander. It excites many of us that want to see that 
happen.
    At the same time, you know, in years past in my previous 
life, I invested in technologies where you are trying to change 
human behavior. That is very difficult. I wondered if you might 
share thoughts. You know, you look at hybrid electric, and you 
are really not having to change a human being's behavior 
because they know they have the ability to use gasoline or 
fossil fuel to charge the battery. In this particular case, 
though, it is a big difference. I mean, the fact is you have 
got that umbilical cord if you are all tied to the plug-in.
    Do you have any comments there about concerns changing 
human behavior as it relates to electric vehicles only and 
moving away from hybrids which seem to me to be picking up a 
lot of steam? I guess me, not being one to want to pick winners 
and losers, I have some degree of concern regarding us picking 
the sole winner in this legislation.
    Mr. Smith. Senator, I think there will be a mix of hybrids 
and plug-in electrics, but the hybrids that will be popular in 
the years to come--I would hazard a guess that they will be 
much more like the Chevy Volt which has a primary electric 
power plant and a small reciprocating engine to perform the 
function of a generator. So if you need to drive your car, as 
the Secretary did, to work 5 miles a day but occasionally go on 
a 250-mile trip, that kind of technology would be probably what 
you would want to have. But if you have two cars or another 
vehicle that satisfies your daily urban requirements, my guess 
is that the plug-in electric would be there. So I do not think 
they are mutually exclusive.
    Then if the prize is achieved that is in this legislation 
and you get a 500 mile an hour battery, then you do not need 
the generator, the belt and suspenders approach, of the hybrid.
    I would say this much. The Electrification Coalition--we 
have done quite a bit of research on how people think about 
this technology today, and I was very shocked that the 
receptivity of the public for electric plug-ins and hybrids is 
enormous now and possibly because of every day you turn on the 
TV and see what is unfolding in the Gulf and Afghanistan or 
what have you. But I really think a combination of those 
technologies will be the issue. It will not be just one or the 
other.
    The Chairman. Senator Wyden.
    Senator Wyden. Thank you, Mr. Chairman. It has been an 
excellent panel.
    Let me give you my assessment of this and start with you, 
Mr. Smith. You have been doing some very important work in this 
area. Here is how I come at it.
    I mean, 70 percent of fuel is used in the transportation 
sector. So this is the ball game. To me, instead of going out 
and picking these winners and losers, which is what we have 
been talking about today, you ought to target a variety of 
different types of electric vehicles for the same reason Willie 
Sutton targeted the banks. I mean, that is where the money is. 
That is where the action is.
    I very much support your agenda, Mr. Smith, and what you 
are talking about. To try to drive down the cost for you and 
everybody else in this space, I have proposed expanding the 
Energy Department's existing program in this area, loans and 
grants, to help vehicle manufacturers in a variety of areas. We 
would include trucks, buses, street cars, and even motorcycles. 
Does this not make sense from two standpoints? One, it gets the 
Government out of the business of picking winners and losers in 
this space, which to me makes sense, but it also is going to 
expand the capacity of vehicle manufacturers in this case which 
ought to drive down your costs and the costs for everybody 
else. Is that a correct assessment?
    Mr. Smith. Senator, first of all, I am familiar to some 
degree with your work on promoting the infrastructure tax 
credit on the buses and things of that nature, and I commend 
you for it. I think that is very important and we support your 
efforts.
    The whole key in this thing gets down to a single point in 
my opinion, and that is driving the price performance of the 
batteries up. Period. The charging stations, the permitting, 
the things of that nature, they are all important, but they 
pale in comparison to that one point. So anything that moves 
toward scale production is what needs to happen here.
    That is why the Electrification Coalition supports these 
deployment centers because we believe that is the fastest way 
to get economies of scale and get these adoption rates up where 
they are not just a niche in one city or another or a small 
group of people, but where you have a very large adoption rate 
in the deployment communities similar to the Race to the Top in 
the school system where you apply for it and you compete for 
it. We think that is the fastest way to get there.
    But whatever moves scale production and price performance 
of battery technology forward, including some of your 
initiatives, we support.
    Senator Wyden. Thank you, and I very much support what you 
are saying in terms of the deployment, infrastructure as well. 
This is all about getting to scale production, and it seems to 
me we have just got to get more players into this. I mean, the 
Union of Concerned Scientists just released a new report on 
fuel economy for trucks, which concluded that medium- and 
heavy-duty trucks make up only 4 percent of the motor vehicles 
on U.S. highways. So that is going to be very important, but 
let us get the biggest number of players into this in order to 
get that scale of production that you in my view correctly 
argue for.
    Let me ask a question of you, Mr. Wynne, and you, Mr. 
Friedman. In addition to this question of expanding the pool of 
areas that the Federal Government really targets, different 
vehicles in addition to trucks, buses, street cars, 
motorcycles, in addition to the deployment stations, I think we 
have got a tremendous opportunity in terms of incentives for 
energy storage. As you know, I have introduced a major piece of 
legislation to create a tax credit for energy storage systems 
connected to the grid as well as buildings and factories and 
homes. Senator Dorgan is a sponsor of this. Senator Murkowski 
is a cosponsor.
    Now, this is a Finance Committee issue as well. I serve on 
the Finance Committee, as does Senator Bingaman. We want to 
provide tax credits for smart grid enabled charging equipment 
for electric vehicles. If you would, Mr. Wynne and Mr. 
Friedman, I would like to have your position on this 
legislation because we are very interested in working with you. 
I put storage right up there with what Mr. Smith has talked 
about in terms of deployment arrangements, scale of production 
issues, and storage is going to create a pretty good market as 
well. I mean, I envision storage, when you look at energy, a 
lot of people buying low and selling high, which is about as 
good as it gets in the American economy. So your positions on 
the storage legislation, Mr. Wynne and Mr. Friedman.
    Mr. Wynne. Senator, we commend you for that legislation. I 
think your pointing to what is particularly beneficial about 
electrifying transportation, which is that we have, as has been 
already pointed out, an enormous supply of fuel that is not 
being utilized properly.
    Just to come back to the point about the grid, you know, 
the grid increasingly is going to benefit from renewable 
technologies, and energy storage, particularly for intermittent 
renewables such as wind and solar, becomes exceedingly 
important. So utilities, if they look far enough down the 
road--and of course, utilities invest on a very, very long 
timeline--are viewing electric transportation as energy storage 
on four wheels, which is extremely important. Closer in, you 
have major utilities, who understand that we are heading into a 
climate-constrained environment, beginning to invest in 
centralized storage. They can utilize the same large format 
lithium-ion batteries in order to create that centralized 
storage. That can help us get down to scale and get down the 
cost curve a lot faster.
    It is not a very large leap from there to utility companies 
understanding I am going to sell the fuel here. Why not own the 
battery? Why not lease the battery to the customer and then 
utilize that battery in secondary applications for stationary 
storage and amortize its cost over a much longer lifetime? That 
will get us down the cost curve even faster.
    Other kinds of business arrangements like that I think are 
very, very exciting. I think your bill will certainly promote 
that and we thank you for that.
    Senator Wyden. I am over my time. Can Mr. Friedman just 
respond, Mr. Chairman?
    The Chairman. Mr. Friedman.
    Mr. Friedman. Thank you very much.
    I think you are absolutely right that storage is an 
incredibly important issue, and we do need more support in that 
direction with bills like yours, as well as actually in the 
electrification bill. There is money and research provided to 
look at what happens to car batteries at the end of their life. 
There is still significant value in those batteries. They may 
not be applicable for vehicles anymore, but those could 
actually be turned into the very storage technologies you are 
talking about. Hydrogen and batteries could be well adapted to 
intermittent renewables to lower their costs and to expand 
their use. We do have to be careful noting, when we attach 
vehicles to the grid, it will put a little bit more wear on 
that battery. So we need to plan for that and keep the 
technology moving.
    Finally, on your first point about the portfolio 
technologies, I want to thank you for your past support.
    Senator Dorgan, I definitely want to right a wrong. I mean, 
you have been an incredible leader on hydrogen for decades, and 
that is incredibly appreciated. You helped us deliver 
significant increased fuel economy standards in 2007. So my 
comments about moving to the deployment side of hydrogen in no 
way reflect negatively on your heroic leadership in the past.
    Senator Wyden. Thank you, Mr. Chairman.
    The Chairman. Thank you very much. I think this has been 
great testimony and a very useful hearing.
    Senator Dorgan, since you are the main sponsor on the bill 
we have been talking about here, why do you not make any 
closing comments you would like to make? Then we will conclude 
the hearing.
    Senator Dorgan. I will do that ever so briefly.
    Thank you, Mr. Friedman, but heroic leadership really 
overstates almost anything that happens in the Congress by 
anybody, I might say.
    [Laughter.]
    Senator Dorgan. Let me again come back to the question of 
picking winners and losers because I think it is so important. 
We hear it all the time and is usually an excuse for doing 
nothing. Just do not pick. God forbid that we should have a 
plan in America for where we want to be and what we want to do 
in the future. I mean, we can let happen whatever happens and 
be satisfied with it, which is the notion of some.
    I was sitting here thinking about these things. We built an 
interstate highway to connect America, which was a really 
important thing to do. If you are in western North Dakota, 
there is a town called Sentinel Butte, a wonderful little 
town--it is out by the Bad Lands. It has 80 people, and about 
30 miles away is Beach, North Dakota, which has about 1,200 
people. Between, we have a four-lane highway, Interstate 94, 
connecting Sentinel Butte to Beach. I mean, price that out for 
a moment. What did it cost to build a highway connecting a city 
with 80 people and another one with 1,200 people? But that is 
not the reason it was built. It was built to connect New York 
to Seattle, and it happens to connect these two little towns in 
North Dakota.
    So the question is what is our grand design here? What do 
we want to achieve for the country? It comes back to the point 
we have made incessantly here. We are unbelievably vulnerable 
and dependent on foreign oil, and it does not take a rocket 
scientist to know that if 25 percent of all the oil we suck out 
of the earth every day has to come to our country and we only 
produce 10 percent of the world's oil, and we have 3 percent of 
the known reserves in the world, that none of that adds up very 
well. So how do we make a change and how do we move in a 
different direction?
    As you said, Mr. Smith, if ultimately we do not have better 
batteries, then all this is just talk. It is not going to 
happen. But I am a big supporter of ARPA-E, for example. I 
mean, I am a big believer. You invest in the new science and 
research and technology, and you open up a vista of 
opportunities. I am absolutely convinced that our future is 
going to be vastly different than our past because we are going 
to make significant investments and yield dramatic dividends 
from those investments.
    So I start down this road understanding that we have 
already made dramatic changes and improvements in battery 
technology and I think will in the future as well. This is just 
a start.
    Mr. Chairman, I wanted to say two things quickly.
    One, I think the testimony is really excellent today. This 
legislation is not written in stone. I mean, it needs to be 
changed here and there and modified reflecting the interests of 
people who have suggested good improvements.
    Also, I want to thank you for holding the hearing because, 
as we move down the road, hopefully with the energy bill that 
we wrote a year ago, I think after 10 or 12 weeks of markup, 
hopefully we will get to have that on the floor of the Senate. 
Perhaps we could consider adding some provisions from this 
authorization bill as well. This hearing I think is central to 
that. So I thank you, Mr. Chairman, for your leadership as 
well.
    The Chairman. Thank you for introducing the bill and your 
leadership on this over a long period of time.
    Thank you all for testifying.
    That is the end of our hearing.
    [Whereupon, at 11:59 a.m., the hearing was adjourned.]

                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

   Responses of David B. Sandalow to Questions From Senator Bingaman

    Question 1. I understand the appeal of a limited number of 
communities initially in order to develop good data on consumer needs 
and the issues that must be addressed for wider deployment. At the same 
time, if the private sector is going to make substantial investments in 
these technologies they'll need some certainty of widespread deployment 
in the near future. How do we address these seemingly competing 
concerns?
    Answer. The Administration looks forward to working with Congress 
to consider the efficacy and efficiency of these and other measures in 
the context of comprehensive energy and climate legislation to protect 
our nation from the serious economic and strategic risks associated 
with our reliance on oil, to create jobs, and to cut down on the carbon 
pollution that contributes to the destabilizing effects of climate 
change.
    Auto companies continue to make their own decisions and plans 
regarding electric vehicle rollouts. Companies that have announced 
their plans are focusing initially on certain regions that best suit 
their individual needs.
    Starting with a smaller number of cities in a targeted deployment 
program may help accelerate future efforts to ramp up technology 
adoption across the country. By focusing resources, the Department can 
work with communities to build a robust team of local leaders that can 
communicate and help transfer best practices and lessons learned to 
other cities for faster deployment in other cities nationwide. Success 
in a limited number of initial communities will then provide confidence 
for manufacturers to broaden vehicle deployment to other parts of the 
country.
    Question 2. Mr. Crane's testimony refers to the Department's 
``ambitious'' goals for battery life and cost. Can you give us any 
insight on how research is progressing in these areas? Do you believe 
the goals are likely to be met in the target time frames?
    Answer. Over the past three years, estimates for plug-in hybrid 
electric vehicle (PHEV) battery life have improved from 1,000 deep 
cycles to more than 2,500, and the estimate of full system cost has 
decreased from more than $1,200/kWh to between $700 and $950/kWh, based 
on useable capacity of the battery. Recent cost models developed by 
Tiax, LLC and Argonne National Laboratory estimate that a Li-ion 
battery cost of $300/kWh (the Department of Energy's FY 2014 target) is 
within reach.\1\ DOE anticipates that part of the needed cost reduction 
will be achieved through high volume production supported by Recovery 
Act funding, as well as design improvements from experience. Two 
independent sources have estimated that increasing PHEV battery 
production from 10,000 to 100,000 batteries per year will result in a 
30-40 percent cost reduction.\2\ The remaining cost reduction will be 
achieved through the use of higher energy materials, under development 
though DOE's research programs, which will lead to smaller, lighter--
and therefore less expensive--systems.
---------------------------------------------------------------------------
    \1\ B. Barnett et al, TIAX, PHEV Battery Cost Assessment, DOE 
Annual Merit Review, May 19, 2009, http://www1.eere.energy.gov/
vehiclesandfuels/pdfs/merit_review_2009/energy_storage/
es_02_barnett.pdf; P. Nelson et al, ANL, Factors Determining the 
Manufacturing Costs of Lithium-Ion Batteries for PHEVs, 24th 
International Electric Vehicle Symposium (EVS-24), Norway, May 2009; 
Santini et al, ANL, Comparing Four Battery Cost Models, 2001-2009, 
Plug-In 2009
    \2\ N. Gioia, Ford, Key Issues and Solutions for Mass 
Electrification of Transportation, IEEE Vehicle Power and Propulsion 
Conference, Dearborn, MI, September 7-11, 2009, http://www.vppc09.org/ 
P. Nelson et al, ANL, Factors Determining the Manufacturing Costs of 
Lithium-Ion Batteries for PHEVs, 24th International Electric Vehicle 
Symposium (EVS-24), Norway, May 2009;
---------------------------------------------------------------------------
   Responses of David B. Sandalow to Questions From Senator Murkowski

                            FEDERAL SUPPORT

    Question 1. Please provide a summary of the types of federal 
support (including spending levels) that were available to electric 
vehicles in FY2009 and FY2010.
    Answer. The table below shows the Department's fiscal year 2009 and 
2010 funds focused specifically on electric vehicles. 

    In addition, the Advanced Technology Vehicles Manufacturing Loan 
Program (ATVM) provides loans to automobile and automobile part 
manufacturers for the cost of reequipping, expanding, or establishing 
manufacturing facilities in the United States to produce advanced 
technology vehicles or qualified components, and for associated 
engineering integration costs. This program received $7.5 billion in 
appropriations in FY 2009 to support up to $25 billion in ATVM loans. 
To date, $8.4 billion in direct loans have been made to four 
manufacturers, three of which have been exclusively focused on plug-in 
electric and hybrid electric vehicles.

                                  ATVM

    Question 2. To the greatest extent possible, please provide a 
summary of loans received to date by the Advanced Technology 
Manufacturing Program and the level of funding that remain available 
for additional loans.
    Answer. The Advanced Technology Vehicle Manufacturing Loan program 
has made four loans to vehicle manufacturers so far totaling $8.4 
billion. $4.2 billion of the credit subsidy remains for future loans 
awarded under the Advanced Technology Vehicle Manufacturing Loan 
Program.

                          DEPARTMENT STAFFING

    Question 3. A significant amount of work could be required to 
implement and administer the programs and plans required by S. 3495. 
Please provide an estimate of the number of employees the Department of 
Energy would need to hire to fulfill the various sections of this 
legislation.
    Answer. The Administration looks forward to working with Congress 
to consider the efficacy and efficiency of these and other measures in 
the context of comprehensive energy and climate legislation to protect 
our nation from the serious economic and strategic risks associated 
with our reliance on oil, to create jobs, and to cut down on the carbon 
pollution that contributes to the destabilizing effects of climate 
change.
    The Department of Energy recognizes the wide range of activities 
and significant reporting requirements included in this bill and 
estimates that an additional 10 to 20 full time employees, including 
contract specialists, are needed to plan and implement these provisions 
by the deadlines specified in the legislation.

                               BUDGETING

    Question 4. If enacted, would any of the programs within this bill 
(S. 3495) be priorities for the Administration and the Department of 
Energy?
    Answer. The Administration looks forward to working with Congress 
to consider these and other measures in the context of comprehensive 
energy and climate legislation to protect our nation from the serious 
economic and strategic risks associated with our reliance on oil, to 
create jobs, and to cut down on the carbon pollution that contributes 
to the destabilizing effects of climate change.
    The Department believes that the programs outlined in this bill 
would accelerate the market introduction of electric drive vehicles, 
which can significantly reduce our nation's dependence on petroleum and 
reduce greenhouse gas emissions.

                            LOAN GUARANTEES

    Question 5. Section 302 would authorize $50 million for loan 
guarantees for advanced battery purchases. As credit subsidy, what 
amount of loan guarantees would that funding cover, if appropriated?
    Answer. The credit subsidy cost will depend on the terms and 
conditions and other project specific characteristics of these loans. 
This program has not yet been funded, nor are regulations in place 
outlining standard procedures.

                              R&D PROGRAM

    Question 6. Section 201 would establish a robust research and 
design program for electric vehicles at the Department of Energy. Are 
there any new authorities in this section that the Department does not 
currently have?
    Answer. The Administration looks forward to working with Congress 
to consider these and other measures in the context of comprehensive 
energy and climate legislation to protect our nation from the serious 
economic and strategic risks associated with our reliance on oil, to 
create jobs, and to cut down on the carbon pollution that contributes 
to the destabilizing effects of climate change.
    Section 201 contains no new authorities for the Department of 
Energy (DOE). Nonetheless, although it includes a number of activities 
currently funded through DOE's Vehicle Technologies Program, there are 
several for which DOE has not previously prioritized resources. For 
example, R&D activities related to ``the benchmarking and assessment of 
open software systems using nationally established evaluation 
criteria'' (section 201(a)(2)(B)) and ``identify[ing] possible uses of 
a vehicle battery after the useful life of the battery in a vehicle has 
been exhausted'' (with demonstration projects and grants for the same) 
(section 201(b) and (c)) have not been emphasized previously.

                         TAX CREDITS VS. GRANTS

    Question 7. S. 3495 contains a tremendous amount of grant funding, 
and it is my understanding that tax provisions could be added to it 
during floor debate. Do you believe that one of those forms of support 
is more appropriate or more relevant for the advancement of electric 
vehicles? Is it important to maintain a mix between tax credits and 
federal grants?
    Answer. The Department of Energy supports incentives to support 
initial market introduction and subsequent market penetration of 
advanced technology vehicles. Tax credits haven proven effective in 
encouraging consumers and private-sector fleets to choose advanced 
vehicles, and they also can encourage additional private-sector 
investment in the technology. Federal grants to promote technology 
deployment have been effective for tax-exempt entities, such as State, 
local, and tribal governments. Federal grants also encourage private-
sector entities--both those with minimal tax burdens as well as large 
and small companies that seek to offset the initial cost of vehicle 
and/or infrastructure purchases.

                           PACE OF DEPLOYMENT

    Question 8. Hybrid vehicles debuted a decade ago, are popular with 
consumers, and currently account for about three percent of the light 
duty vehicle market. Is it reasonable to expect that this legislation--
or any other legislation--will initiate a tipping point to allow 
electric vehicles to deploy at a much faster rate?
    Answer. Legislation that facilitates electric vehicle (EV) 
deployment in significant volumes can increase production rates of 
components unique to EVs, such as batteries, power electronics, and 
specialized electric drive components. Relatively modest increases in 
production volumes can result in significant cost reductions and help 
overcome the current price disadvantage these vehicles have today.
    Given the national priorities of ending dependence on petroleum and 
reducing greenhouse gas emissions, as well as fuel cost volatility, 
such legislation could be an important step in deploying electric drive 
vehicles at a much faster rate. The Administration looks forward to 
working with Congress to consider the efficacy and efficiency of these 
and other measures in the context of comprehensive energy and climate 
legislation to protect our nation from the serious economic and 
strategic risks associated with our reliance on oil, to create jobs, 
and to cut down on the carbon pollution that contributes to the 
destabilizing effects of climate change.

                               COST SHARE

    Question 9. S.3495 requires at least a 20 percent non-federal cost 
share.

          a. Do you agree with this level of cost sharing?
          b. Do you believe the Secretary should have authority to 
        reduce the cost share below 20 percent, or eliminate it 
        completely? If so, please provide an example of when that 
        authority may prove necessary and appropriate.
          c. Could a higher cost share (greater than 20 percent) help 
        ensure that only the most financially sound communities are 
        selected, and thereby lead to an even greater deployment of 
        electric vehicles and infrastructure once federal funds have 
        ended?

    Answer. Cost-sharing is an important mechanism for leveraging 
federal funds and ensuring that the government's partners focus on 
topics relevant to the market. The costshare requirements set forth in 
Section 988 of the Energy Policy Act of 2005 (minimum of 20 percent 
cost share for R&D projects and minimum of 50 percent cost share for 
demonstration and commercialization projects) have proven effective in 
meeting these objectives. Providing the Secretary the authority to make 
decisions regarding cost share on a case-by-case basis allows the 
flexibility to ensure program objectives are met (for example, adequate 
participation among State, local, and tribal governments and geographic 
diversity of applicants). Section 988 of the Energy Policy Act of 2005 
provides the Secretary this decision-making authority.

                             CHARGING UNITS

    Question 10. The Administration recently announced it would use 
stimulus funds to pay for up to 4,400 charging units, worth up to 
$2,000 each, for the Chevy Volt. Why was just one vehicle chosen? Will 
any others receive similar support?
    Answer. The provision of 4,400 residential charging units to 
support deployment of the Chevrolet Volt Extended Range Electric 
Vehicle (EREV) is part of Coulomb Technologies' ``ChargePoint America'' 
program, one of eight cost-shared projects competitively-selected for 
award under the Department's Transportation Electrification effort, 
funded by the Recovery Act.
    In addition to the Chevy Volt, the Coulomb project will provide 
infrastructure to support electric drive vehicles from Ford and smart 
USA and cover nine major metropolitan areas. Another Transportation 
Electrification grant, awarded to ECOtality North America for ``The EV 
Project,'' will provide free charging units to purchasers of the Nissan 
Leaf electric vehicle and the Chevy Volt extended range electric 
vehicle in seven metropolitan areas. In total, the eight Transportation 
Electrification awards will result in the coordinated deployment of 
nearly 7,000 electric-drive vehicles and over 16,000 Level 2 charging 
units in residential, commercial, and public locations.

                           CHARGING STATIONS

    Question 11. How many charging stations do you believe will need to 
be installed for every electric vehicle put on the road?
    Answer. A variety of factors will determine the optimal number of 
charging stations per electric vehicle, including the vehicle type 
(light-duty, medium-duty, or heavyduty), powertrain configuration 
(electric vehicle, plug-in hybrid electric vehicle, or extended-range 
electric vehicle), charger capability (standard Level 2 charging, or 
Level 3 ``fast'' charging), and charger location (residential, 
commercial, or public). The Department of Energy (DOE) believes that 
initially, Level 2 residential chargers (one per vehicle) will be the 
most important to the light-duty fleet, as the majority of these 
electric drive vehicles will likely charge during overnight hours where 
the vehicles are domiciled.
    Through the electric drive vehicle demonstration and deployment 
projects funded through the Recovery Act's Transportation 
Electrification program, DOE will collect and analyze a comprehensive 
data set regarding electric drive vehicle usage patterns and charging 
infrastructure use for a variety of vehicle applications. This data 
will provide valuable information about the appropriate mix of charging 
infrastructure to support the large-scale deployment of all types of 
electric drive vehicle technologies.
    Ultimately, the required number of publicly-available charging 
points will be a fraction of the number of electric drive vehicles on 
the road. It is anticipated that these public charging points will 
supplement residential charging.

                             CHARGING TIMES

    Question 12. Right now, most gas-powered vehicles can be fueled in 
less than 10 minutes, and then drive for hundreds of miles. A drawback 
for electric vehicles is that they take hours to fully recharge. Even 
quick charging, which reduces battery life, takes at least 20 minutes. 
Can you discuss any changes to charging times that you see over the 
next several years?
    Answer. Without a scientific breakthrough, significant reductions 
in electric vehicle charging times in the next several years are 
unlikely, given current operational constraints for both battery 
technologies and charger capabilities. However, the Department of 
Energy anticipates upcoming electric drive vehicles and charging 
infrastructure will be sufficient to meet the requirements of the 
majority of vehicle owners. According to the 2009 National Household 
Travel Survey, American drivers average 41.4 miles of daily driving. A 
quarter of drivers travel more than 50 miles per day (75th percentile = 
48.8 miles driven per day). One in ten drivers exceed 85 miles 
travelling per day (90th percentile =85.3 miles driven per day)--less 
than the driving range of all upcoming highway-capable electric 
vehicles. Additionally, the market introduction of plug-in hybrid 
vehicles and extendedrange electric vehicles will not have a range 
limitation. For example, the Chevy Volt has a 40-mile all-electric 
range but also has a gasoline-powered rangeextender that provides a 
total vehicle range of up to 350 miles, allowing consumers to operate 
their vehicles in all-electric mode during the majority of their trips, 
while enabling much longer travel distances when required.

                            1990S VS. TODAY

    Question 13. In your book ``Freedom from Oil,'' you note that 
General Motors' EV-1 had a range of 80 to 140 miles and was popular 
with consumers. That's about what we expect of electric vehicles today, 
and yet, General Motors ultimately pulled the plug on the EV-1 program 
due to what you describe as ``inadequate'' overall buyer interest. I 
understand that the EV-1 was leased, and the Volt and Leaf will be 
commercially produced, but can you explain what else has changed to 
make the deployment of electric vehicles a sure thing today? How have 
the failures of the 1990s been resolved?
    Answer. Better battery technology is the key difference between 
today's electric drive vehicles and the electric vehicles (EVs) of the 
1990s. Initially, the EV-1 used lead-acid batteries with limited energy 
density, which resulted in a two-passenger vehicle, relatively short 
battery life, and a long recharging time. In contrast, today's lithium-
ion battery technology allows the Leaf, Volt, and other EVs to 
accommodate 4-or 5-passengers with a warranty on battery life and much 
faster charging times.

                             BUILDING CODES

    Question 14. The new International Green Construction Code from the 
International Code Council has provisions addressing vehicle charging, 
as does the National Electrical Code. Does Section 103(b) of S.3495 
anticipate that the Secretary of Energy could adopt private sector 
model codes that provide for the efficient and safe charging of 
electric vehicles, rather than having DOE develop its own code?
    Answer. The Department of Energy (DOE) does not author or adopt 
model code to address vehicle charging infrastructure; rather, it plays 
a supporting role in the development and adoption of model vehicle-and 
infrastructure-related codes and standards. DOE has extensive 
experience working with code development organizations and standards 
development organizations, including the International Code Council and 
others, to facilitate consensus around the development and adoption of 
these codes. DOE also has experience in training code officials and 
sharing best practices for the implementation of codes and standards 
for vehicles and infrastructure that have been adopted by local 
authorities having jurisdiction (AHJs). DOE supports the adoption of 
private sector model codes for safe electric vehicle charging and would 
work with code development organizations to modify existing codes if 
and where appropriate.

                         TECHNOLOGY NEUTRALITY

    Question 15. As introduced, S. 3495 would authorize nearly $6 
billion for electric vehicle technologies. How could this substantial 
increase in funding affect the development of other technologies, such 
as natural gas, hydrogen, or more efficient ICE vehicles, which receive 
far less funding each year?
    Answer. The Administration looks forward to working with Congress 
to consider these and other measures in the context of comprehensive 
energy and climate legislation to protect our nation from the serious 
economic and strategic risks associated with our reliance on oil, to 
create jobs, and to cut down on the carbon pollution that contributes 
to the destabilizing effects of climate change.
    The Department of Energy continues to pursue a portfolio of 
advanced transportation technologies that can reduce petroleum 
consumption and mitigate greenhouse gas emissions, and electric drive 
technologies are a critical component of that portfolio. Several 
electric drive vehicle configurations, notably hybrids and plug-in 
hybrids, will still require highly-efficient, low-emissions internal 
combustion engine technology. Advanced combustion engines can 
significantly increase vehicle fuel economy and are an important part 
of a hybrid electric system. Continued development is essential to 
further increase the fuel efficiency of hybrid electric vehicles. 
Similarly, alternative fuel options such as biofuels will continue as 
important options for internal combustion engine operation and 
complement the emissions reductions possible through vehicle 
electrification.
    Hydrogen fuel cell vehicles share electric drive component 
technologies, so advancements in electric drive systems also support 
and advance the development of fuel cell vehicles.
    Question 16. By promoting one technology so greatly, could we 
inadvertently decentivizes the development of cheaper ways to reduce 
fuel consumption and greenhouse gas emissions, such as advanced 
internal combustion engines that achieve significant increases in fuel 
economy?
    Answer. The Department of Energy continues to pursue a portfolio of 
advanced transportation technologies that can reduce petroleum 
consumption and mitigate greenhouse gas emissions, and electric drive 
technologies are a critical component of that portfolio. Electric drive 
vehicles include hybrids and plug-in hybrids that use biofuel and 
renewable electricity, full electric vehicles recharged with renewable 
electricity, and fuel cell vehicles that use renewable hydrogen. Other 
advanced technologies such as vehicle lightweighting and combustion 
engines can significantly increase vehicle fuel economy and are an 
important part of a hybrid electric system. Continued development is 
essential to further increasing the fuel efficiency of hybrid electric 
vehicles.
    Question 17. By promoting one technology much more than others, do 
we risk freezing the industry's investments in fuel cell and other 
alternative technology vehicles?
    Answer. No. Although the Department of Energy places some emphasis 
on electric drive technologies, we do not feel that we risk freezing 
industry investments in fuel cells or other advanced vehicle 
technologies. Working together with industry partners, the Department 
continues to pursue a portfolio of near-and long-term advanced 
transportation technologies that can reduce petroleum consumption and 
mitigate greenhouse gas emissions, and electric drive technologies are 
a critical component of that portfolio. Electric drive vehicles include 
hybrids and plug-in hybrids that use biofuel and renewable electricity, 
full electric vehicles recharged with renewable electricity, and fuel 
cell vehicles that use renewable hydrogen. These variations of electric 
drives share component technologies, so advancements in plug-in hybrid 
power electronics, for example, also support and advance the 
development of fuel cell vehicles. Similarly, advanced technologies 
such as vehicle lightweighting and advanced combustion engines can 
significantly increase vehicle fuel economy and are an important part 
of a hybrid electric system. Continued development is essential to 
further increasing the fuel efficiency of hybrid electric vehicles.

                            UTILITY PLANNING

    Question 18. Section 301 requires each electric utility to prepare 
``a plan to support the use of plug-in electric vehicles'' within two 
years.

   What sort of resource burden would that planning process 
        impose on utilities that do not receive a waiver?
   How much would a typical planning process cost, and how 
        could that affect rates if cost recovery is allowed?
   Would it make more sense to require only utilities in areas 
        that are expected to have a significant near-term increase in 
        PHEVs, such as the communities selected for the targeted 
        deployment program, to undertake this planning?

    Answer. The Administration looks forward to working with Congress 
to consider the efficacy and efficiency of these and other measures in 
the context of comprehensive energy and climate legislation to protect 
our nation from the serious economic and strategic risks associated 
with our reliance on oil, to create jobs, and to cut down on the carbon 
pollution that contributes to the destabilizing effects of climate 
change. The utility planning activity required in Section 301 is a 
useful mechanism for gauging the preparedness of the electrical grid to 
accommodate a national objective that amounts to a revolutionary 
movement in our transportation sector. It will enable utilities to make 
a rational assessment of how they, as critical partners in this 
transformation, will need to react in the coming years.
    The resource burden for such a planning process as well as the cost 
will be highly variable, as will the effects on electricity rates. The 
cost of developing such plans will be dependent on the in-house 
resources of each utility, how each utility and its respective 
regulatory agency (Public Utility Commission, City Council, Co-op 
Board, etc.) perceives the requirement, their own impression of the 
state of their infrastructure, and the likelihood of PHEV penetration 
in their territory. In many cases, the bulk of the work required to 
develop the plan may be conducted by the respective engineering and 
business operations personnel at the utility, reducing the cost to 
produce the work. The effect of producing the plan on electricity rates 
will be determined primarily by the regulatory body.
    It may be more cost efficient in the near-term to limit the 
applicability of the planning requirement initially to those utilities 
selected for the targeted deployment program. However, the greatest 
value of the planning requirement (i.e. the ability to assess 
preparedness for PHEVs on a national level) is preserved by not 
limiting the requirement to a few select areas.

                      TARGETED DEPLOYMENT PROGRAM

    Question 19. A targeted deployment program could help deploy 
vehicles and infrastructure within communities, but it would do little 
to assist with long-distance driving. What do you think can and should 
be done to facilitate intercity road trips in electric vehicles?
    Answer. The Department of Energy (DOE) anticipates the majority of 
trips in electric vehicles (EVs) over the next several years will be 
short, local trips well within the vehicle's range capability. Initial 
deployment of charging infrastructure will occur in cities and 
metropolitan areas with high concentrations of consumers whose needs 
will be met by such vehicles. DOE expects that to facilitate longer 
intercity trips, Level 3 ``fast'' charging infrastructure will be 
deployed along routes connecting cities, establishing a network of EV 
corridors between electric transportation hubs.
    Several of the projects funded under the Transportation 
Electrification Recovery Act program target the deployment of charging 
infrastructure to demonstrate the viability of this hub/corridor 
system. These projects will place Level 3 ``fast'' chargers along 
corridors connecting Portland, Oregon and Seattle, Washington; Phoenix 
and Tucson, Arizona; and Chattanooga, Knoxville, and Nashville, 
Tennessee. Additionally, the availability of plug-in hybrid electric 
and extended range EVs will accommodate the needs of consumers who 
require longer travel distances prior to the full, nationwide 
deployment of EV charging infrastructure.

                      TARGETED DEPLOYMENT PROGRAM

    Question 20. As drafted, I am concerned that communities in my home 
state of Alaska would have a difficult time being selected for 
participation in the targeted deployment program. This is driven in 
part by the current lack of electric vehicle manufacturing, retailing, 
and infrastructure development in Alaska, and also by the fact that 
some manufacturers have already selected initial retail markets for 
their electric vehicles.

   S.3495 requires communities to be selected for the targeted 
        deployment program within one year of enactment of this Act. 
        Let's assume this bill is enacted in September of 2010. In how 
        many cities will electric vehicles be available for retail sale 
        in one year after that date (hypothetically September 2011)?
   How many electric vehicles do you expect to be commercially 
        produced and available for sale in the United States next year? 
        Two years from now? Five years from now?
   Chevrolet has chosen Washington, D.C., Michigan, and 
        California as its initial retail markets for the Volt. Nissan 
        has reportedly chosen Seattle, Oregon, Tennessee, Phoenix, 
        Tucson, and San Diego as part of the EV Project. Given that 
        electric vehicles will be in limited commercial production for 
        at least several more years, won't these cities and states have 
        a significant advantage over others for selection to 
        participate in the targeted deployment program?
   How could a state like Alaska overcome Section 106's 
        requirements for community deployment plans to include 
        ``documentation'' of 1) ``plug-in electric drive vehicle 
        manufacturers and retailers'' and 2) ``third-party providers of 
        residential, private, and publicly available charging 
        infrastructure or services''?

    Answer. Most major auto manufacturers have publicly announced plans 
to sell vehicles with some type of electric-drive powertrain in the 
next several years. However, only a few manufacturers have named 
specific cities for their vehicle roll outs, and it is not clear which 
other cities will join those already named. Based on public 
announcements and according to the Department of Energy's (DOE) 
analysis of potential market introduction and penetration scenarios, we 
estimate that within a year, the U.S. market for electric and plug-in 
hybrid electric vehicles will be between 25,000 and 85,000 vehicles. 
Within two years, DOE anticipates the market for these vehicles will be 
between 60,000 and 300,000 vehicles.
    Within five years, DOE expects between 200,000 and 1 million 
electric and plugin hybrid electric vehicle sales annually. These 
estimates represent the range of the most likely electric-drive vehicle 
market penetration scenarios, based on DOE analysis taking into account 
projected consumer demand as well as the ability of automobile 
manufacturers to scale up vehicle production.
    Although cities that have been announced as part of manufacturers' 
existing vehicle introduction plans would seem to have an advantage, 
the targeted deployment program requires significant commitment from 
the cities in order to participate. A city committed to taking the 
necessary steps to facilitate electric drive vehicle introduction will 
attract vehicle manufacturer participation. In fact, even though 
specific rollout cities have been included in public announcements, we 
understand auto manufacturer intent is to sell vehicles nationwide. If 
states such as Alaska express interest in electric vehicle deployment, 
we expect that the manufacturers will want to meet that need and the 
market demand.

                             RAW MATERIALS

    Question 21. I've often expressed concern that if we do not develop 
our own resources, we risk trading our dependence on foreign oil for a 
similarly devastating dependence on foreign materials. Do you share 
that concern? As the United States government looks at ways to promote 
electric vehicles, how would you recommend addressing it?
    Answer. The Department of Energy (DOE) does not expect electric 
vehicle (EV) promotion and commercialization will lead to a devastating 
dependence on foreign materials. Currently, the United States consumes 
378 million gallons of gasoline per day\3\, equivalent to a weight of 
about 1 billion kilograms (kg) per day. Although some resources EVs use 
are considered valuable, they cannot be consumed at the same magnitude 
as petroleum.
---------------------------------------------------------------------------
    \3\ ``Petroleum Basic Statistics'', U.S. Energy Information 
Administration, http://www.eia.doe.gov/basics/quickoil.html
---------------------------------------------------------------------------
    Lithium is one material critical for energy-dense batteries used in 
EVs. One kg of lithium is required to make a battery that would propel 
a vehicle 25 miles. One gallon (or 2.8 kg) of gasoline can also be used 
to propel a vehicle 25 miles. However, the battery can be recharged 
another 3,000 to 5,000 more times to travel that same 25 miles, and 
once the battery has reached the end of its life, the lithium can be 
recovered to produce a new battery for use once again.
    Today, the major sources of lithium are salt brines in South 
America (in Chile, Argentina, Bolivia), but there are also U.S. brine 
sources, and there are rock sources throughout the world, including in 
United States, Europe, China, and Australia. Current International 
Energy Agency estimates show no serious lithium supply problem until 
more than 50 percent of the world's vehicle fleet is electrified. (Per 
IEA Blue Scenario for Carbon Reduction).
    Rare earth materials such as Neodymium, which is used in magnets 
for EV motors, also could be seen as limiting EV introduction. The 
Government Accountability Office has recognized that the future 
availability of some rare earth elements, including Neodymium, is 
largely controlled by Chinese suppliers\4\. DOE has also recognized 
this issue and is developing its first-ever strategic plan concerning 
rare earth metals\5\. Depending on production and market demands, it is 
possible that a market shortage of these materials could exist in the 
2012-2015 timeframe. However, similar to batteries, each EV would 
require only a limited amount of these materials to be effective for 
the life of the vehicle, and there are potential U.S. resources for 
rare earth materials as well. Furthermore, induction motors can be made 
that do not use any permanent magnets or rare earth materials. 
Currently the Tesla Roadster and Nissan Leaf EV use this type of motor 
design.
---------------------------------------------------------------------------
    \4\ ``Rare Earth Materials in the Defense Supply Chain'', U.S. 
Government Accountability Office, GAO-10-617R
    \5\ ``DOE Announces RFI on Rare Earth Metals'', May 6, 2010, http:/
/www.energy.gov/news/8945.htm
---------------------------------------------------------------------------
                     LOCAL LEVEL GRID IMPROVEMENTS

    Question 22. During the committee's electric vehicle hearing on the 
22nd, a Senate-wide alert went out asking officers to conserve energy 
from noon to 7 pm. According to the alert, ``Our local utility 
provider, PEPCO, is asking its customers to conserve electricity due to 
intense heat and humidity. This peak demand event may lead to possible 
power disruption in the DC area if electrical demand exceeds 
transmission capacity.''

          a. Can you describe the impact this sort of alert would have 
        on consumers' ability to re-charge their vehicles during 
        daytime hours?

    Answer. Electric plug-in vehicles will increase the load on the 
grid whether they are charged on-peak or off-peak. However, power 
companies have a variety of tools at their disposal to reduce demand 
during peak periods. Tools include options such as (1) time-varying 
rates (e.g., critical peak pricing) which are designed to encourage 
consumers to switch their electricity use from on-to off-peak periods 
and (2) load management programs (e.g., air conditioner cycling) and 
devices (e.g., smart thermostats) which are designed to curtail power 
consumption during peak periods. Power companies will be interested in 
using these tools to manage re-charging schedules for plug-in vehicles. 
Options include: (1) offering special time varying rates for charging 
stations or owners of plug-in vehicles to encourage them to charge 
during off-peak periods and (2) offering load management devices to 
charging stations and owners of plug-in vehicles to reduce electricity 
charging during peak periods.

          b. Can you describe the local level grid improvements that 
        would need to be undertaken in order to ensure that sufficient 
        transmission capacity exists to handle regular power demand and 
        any additional demand from electric vehicles?

    Answer. The type of grid improvements that will be needed in the 
future to accommodate plug-in vehicles depends on the number and 
concentration of vehicles and the charging patterns of consumers. For 
example, it is possible that little to no improvements will be needed 
until millions of vehicles are on the road, or until thousands of 
vehicles are concentrated in certain electric distribution service 
areas. Even in these cases, if owners charge their vehicles at night or 
during other off peak periods exclusively, analysis indicates that 
existing transmission and distribution facilities may be sufficient to 
handle the load if and until there are tens or hundreds of millions of 
vehicles.
    However, integration with the grid would be enhanced, and the 
potential impacts on the electric system reduced, if grid 
infrastructure improvements were made alongside the development of the 
markets for plug-in vehicles. For example, vehicles can take many hours 
to charge at typical residential outlet voltages (e.g., 120v). 
Equipping charging stations with higher voltage plugs (e.g., 220v) can 
reduce charging times and make it easier for consumers to ``refill 
their tanks.'' Other useful electric distribution upgrades include 
smart systems that enable grid operators to be aware of where and when 
vehicles are charging so that steps can be taken to reduce demand 
during peak periods. Also, deployment of advanced metering 
infrastructure can make it easier for power companies to apply time-
varying rates that encourage owners of plug-in vehicles to charge 
during offpeak periods. In the longer term, smart distribution systems, 
equipped with real time controls and automated operations that can 
safely accommodate two-way flow of power, could make use of the storage 
capacity embodied in the battery packs on-board electric vehicles to 
use to meet electric system needs for local voltage and other 
requirements.

     Response of David B. Sandalow to Question From Senator Dorgan

    Question 1. Will DOE please submit their analysis of the National 
Research Council's Plug-in Hybrid Electric Vehicles Study for the 
record?
    Answer. The Department's analysis of the National Academy of 
Sciences' Plug-in Hybrid Electric Vehicles (PHEV) Study is provided 
below.

                                SUMMARY

    The National Academy of Sciences' (NAS) report significantly 
overestimates both the current and future cost of battery technology. 
Unfortunately, this error results in a concurrent underestimation of 
market penetration and realized benefits cited in the report. There is 
referenced data (partial list below), as well as a wealth of anecdotal 
and intuitive examples, indicating that the NAS's assumed cost is 
inaccurate. The NAS was informed of this inaccuracy but chose to go to 
print without revision.

   The NAS overestimated the current cost of lithium-ion 
        batteries, overstating the cost of PHEV-10 batteries, and 
        significantly overstating the cost of PHEV-40 batteries for 
        high volume production.
   Future cost reductions will be greater than those projected 
        in the NAS study. Specifically, NAS assumes a 43 percent cost 
        reduction by 2030 from a current estimated cost of $1750/kWh, 
        whereas DOE estimates that a >60 percent cost reduction is 
        likely from a current estimated cost of $800/kWh.

Current Battery Costs
    The NAS estimates of the current cost of PHEV-10 batteries ($1650/
kWh usable) and PHEV-40 batteries ($1750/kWh usable) are unreasonably 
high.

   Typically, $/kWh cost is lower for higher energy batteries, 
        such as for the PHEV-40. As the report states, additional 
        energy can be added with relatively small cost increment by 
        making electrodes thicker. A PHEV-40 battery, with four times 
        the energy of a PHEV-10 battery, is estimated to cost roughly 
        twice as much as a PHEV-10 (Kalhammer, 2009). Thus, a PHEV-40 
        battery will have a much lower $/kWh cost than a PHEV-10 
        battery.
   Press reports describe the expected cost of the Chevy Volt 
        PHEV-40 battery at approximately $8,000. This is equivalent to 
        $1,000/kWh of useable energy, much lower than the NAS estimates 
        of $1750/kWh of useable energy.
   Industrial developers of PHEV-10 batteries, under existing 
        R&D contracts with U.S. Advanced Battery Consortium (USABC), 
        are required to develop battery cost estimates, using 
        standardized USABC cost models. These developers have estimated 
        costs of $800-$1000 per usable kWh for PHEV-10 batteries at a 
        production level of 100,000/year.
   A number of May 2010 media reports have indicated the Nissan 
        Leaf battery as costing as little as $375/kWh. Although this 
        cost is lower than current DOE estimates, the figure does 
        correlate with announced Leaf pricing of $32,780 and an 
        announced battery size of 24kWhr.

Future Cost Reduction Potential
    Commercial 18650-size lithium-ion cells (used primarily in battery 
packs for laptop computers) currently cost $200-$250/kWh (Barnett, 
2009). The cost of the battery pack ranges from $400/kWh to $700/kWh 
based on nameplate capacity.

   High volume production of these small lithium ion battery 
        cells is a key enabler for achieving these low costs.
   These batteries use cobalt oxide cathode material, which is 
        more expensive than the materials proposed for PHEV batteries. 
        They also have small Ah capacity per cell, and thus are more 
        expensive than larger-capacity PHEV cells would be at 
        comparable production levels.
   Independent analysis conducted by TIAX, LLC (Barnett, 2009) 
        indicated a future battery manufacturing cost of $364-$581/kWh 
        useable energy for a PHEV-20 battery pack for the four leading 
        battery chemistries being developed today.

Cost Reductions due to Manufacturing Efficiency Gains and Design 
        Optimization
   The NAS report estimates that the cost of PHEV batteries can 
        be reduced by 25 percent during 2010-2015 with ``increased 
        production and learning by doing''.

    --A major automotive OEM has estimated that PHEV battery costs 
            could drop 20-40 percent immediately with volume 
            manufacturing of 75,000-100,000/year (Gioia, 2009). 
            Multiple projects are underway to establish this level of 
            battery manufacturing (battery manufacturing awards funded 
            under the American Recovery and Reinvestment Act).
    --In addition, battery costs are estimated to reduce ?3 percent/
            year with technology improvements (Gioia, 2009).
    --Using the OEM estimates given above (a 30 percent reduction due 
            to volume manufacturing, and 3 percent/year technology 
            improvement), costs would be expected to reduce by 40 
            percent during the same period.

   Lithium-ion battery costs are projected to be $600/kWh 
        useable for PHEV-10, and $300-400/kWh for PHEV-40, based on 
        battery manufacturing cost studies conducted by Argonne 
        National Laboratory (Nelson, 2009; Santini, 2009)

                               REFERENCES

          B. Barnett et al, TIAX, PHEV Batttery Cost Assessment, DOE 
        Annual Merit Review, May 19, 2009, http://www1.eere.energy.gov/
        vehiclesandfuels/pdfs/merit_review_2009/energy_st orage/
        es_02_barnett.pdf
          P. Nelson et al, ANL, Factors Determining the Manufacturing 
        Costs of Lithium-Ion Batteries for PHEVs, 24th International 
        Electric Vehicle Symposium (EVS-24), Stavanger, Norway, May 
        2009
          Santini et al, ANL, Comparing Four Battery Cost Models, 2001-
        2009, Plug-In 2009
          N. Gioia, Ford, Key Issues and Solutions for Mass 
        Electrification of Transportation, IEEE Vehicle Power and 
        Propulsion Conference, Dearborn, MI, September 7-11, 2009, 
        http://www.vppc09.org/
          F. Kalhammer, EPRI, 24th International Electric Vehicle 
        Symposium (EVS-24), Stavanger, Norway, May 2009
          Nissan media reports: http://www.thetruthaboutcars.com/
        nissan-leaf-batterypacks-break-the-400kwh-barrier/

   Responses of David B. Sandalow to Questions From Senator Cantwell

    Question 1. The Promoting Electric Vehicles Act (S. 3495) contains 
numerous provisions designed to provide grants to stakeholders, for 
purposes of scaling up electric vehicle and infrastructure deployment. 
I support this general effort. However, we are currently facing very 
tight fiscal times, and in addition to grants, there are other means of 
providing Federal financing to help deploy these technologies at scale, 
in a manner that may prove even more cost-effective to taxpayers. In 
particular, how does DOE intend to use programs already at its 
disposal--such as the loan guarantee program--to help scale-up EV 
infrastructure deployment? This seems like something DOE could start 
moving on today, rather than waiting for future appropriations and 
legislation.
    Answer. The Advanced Technology Vehicles Manufacturing (ATVM) Loan 
Program provides direct loans to support the development of advanced 
technology vehicles and associated components. The ATVM Loan Program 
has closed loans totaling $8.4 billion with four advanced technology 
vehicle manufacturers. The program received a total of $7.5 billion in 
appropriated funds for the cost of ATVM loans. We expect to complete 
the investment of the funds by the end of FY 2010.
    Section 1703 of Title XVII of the Energy Policy Act of 2005 (EPAct) 
identifies ten discrete categories of projects that are eligible for 
federal loan guarantees, including production facilities for fuel 
efficient vehicles, including hybrid and advanced diesel vehicles. The 
FY 2011 budget request includes $500 million to support between $3--5 
billion in loans for renewable energy and end-use energy efficiency 
projects.
    Question 2. Are there any barriers to doing so (perhaps barriers 
against projects that span multiple sites, as a result of OMB's 
existing rules)?
    Answer. The Advance Technology Vehicle Manufacturing (ATVM) Loan 
Program and the Title XVII Loan Guarantee Program support development 
of advanced technology vehicles. The Advanced Technology Vehicles 
Manufacturing (ATVM) Loan Program provides direct loans to support the 
development of advanced technology vehicles and associated components. 
In addition, Section 1703 of Title XVII of the Energy Policy Act of 
2005 (EPAct) identifies ten discrete categories of projects that are 
eligible for federal loan guarantees, including production facilities 
for fuel efficient vehicles, including hybrid and advanced diesel 
vehicles.
    Question 3. If there are any bureaucratic barriers, or a perceived 
lack of existing statutory authority that prevents DOE from using 
either the loan guarantee program or advanced technology vehicles 
manufacturing program (ATVM, created under Section 136 of the Energy 
Independence & Security Act of 2007) to help finance EV infrastructure 
deployment, would you provide relevant legislative language to the 
Committee to provide this explicit authority?
    Answer. The Advance Technology Vehicle Manufacturing (ATVM) Loan 
Program and the Title XVII Loan Guarantee Program support development 
of advanced technology vehicles. The Advanced Technology Vehicles 
Manufacturing (ATVM) Loan Program provides direct loans to support the 
development of advanced technology vehicles and associated components. 
In addition, Section 1703 of Title XVII of the Energy Policy Act of 
2005 (EPAct) identifies ten discrete categories of projects that are 
eligible for federal loan guarantees, including production facilities 
for fuel efficient vehicles, including hybrid and advanced diesel 
vehicles.
    Question 4. Accelerating the deployment of electric vehicles 
requires a number of moving pieces of policy to come together at once, 
and Sen. Dorgan's legislation is an admirable effort in this regard. 
One of the components of particular interest to me is our nation's 
evolving smart grid policy. As you are aware, members of this Committee 
and I had a critical role in crafting Title 13 of the Energy 
Independence and Security Act of 2007, which laid down the parameters 
for DOE's smart grid investment grant and regional demonstration 
programs, which are currently underway. Meanwhile, the standards-
setting process is also currently unfolding at NIST, with FERC expected 
to soon take them up. What is DOE doing to ensure standard and 
cybersecure communications protocols for EV's and the combination of 
public and private infrastructure expected to provide charging services 
for consumers?
    Answer. Two DOE program offices, the Offices of Electricity 
Delivery and Energy Reliability (OE) and Energy Efficiency and 
Renewable Energy (EE), are concerned with EV charging infrastructure, 
and are coordinating in the effort managed by the National Institute of 
Standards and Technology (NIST) on the development of communication 
protocols for EVs. EE, through its Vehicle Technologies Program, 
focuses on the vehicle itself and the methods for provisioning it with 
energy, and OE focuses on the vehicle-to-grid interface and the 
attendant reliability, security and market aspects of EVs. Development 
of communications protocols for EVs is taking place within Priority 
Action Plan 11 (PAP 11), by a working group named ``Interoperability 
Standards to Support Plugin Electric Vehicles''. DOE and its national 
lab partners are participating directly in the working group, as are 
the critical standards organizations, namely SAE International (Society 
of Automotive Engineers) and IEC (International Electrotechnical 
Commission). Standards on the informational aspects of the vehicle-to-
grid interface are expected to be ready for consideration under the 39 
FERC rulemaking process established under EISA 2007 early in calendar 
year 2011.
    Question 5. There are certain analogies that exist with respect to 
telecom and EV infrastructure deployment policies. That is, consumers 
can expect to drive their EV's outside their home utility's service 
territory, just as when ``roaming'' on a cell/wireless network. In your 
view, are utilities equipped to deal with the associated data-
management and billing challenges, given the current state of the 
electric grid and its communications capabilities? What role should 
consumers have in choosing the kind of EV-related charging services 
they would like to purchase?
    Answer. At existing capacities and current configurations, the 
electric grid and telecommunications infrastructures are not currently 
able to provide analogous services to EV owners as those that are 
currently available to users of cell/wireless networks. However, such 
services do not appear to require the invention of new technologies. 
What is needed is investment in existing technologies and equipment and 
the development of new designs and systems integration efforts that can 
detect charging and re-charging, and bill owners of plug in vehicles, 
enabling them to ``re-charge'' while roaming among electric utility 
service territories. These new designs need to include smart grid 
technologies, tools, and techniques, including advanced sensors and 
controls, distribution automation systems, and advanced metering 
infrastructure.
    With regard to data management and billing systems, electric 
vehicles do not resemble any other electric appliance so it is not 
surprising that existing data management and billing systems are not 
able to readily handle this type of application. However, it would not 
be a major technical hurdle to develop data management and billing 
systems to accommodate large number of electric vehicle roaming and 
recharging in multiple electric service territories. What is needed is 
a level of demand that encourages power companies or other entities to 
invest in the development and deployment of such systems.
    Consumers will likely play a major role in the type of charging 
services they receive. Electric vehicle markets and consumer acceptance 
have never been tested on a large scale. Manufacturers have interest 
and incentive in conducting extensive market research to determine 
consumer likes and dislikes, not only about the vehicle themselves but 
about the other equipment involved in owning and operating vehicles. In 
addition, no one knows how this market will develop. It is possible for 
there to be a competitive market in the provision of charging services 
to consumers. If this turns out to be the case, then competitive 
advantage will require providers to involve and cater to the needs and 
desires of consumers for charging services.
    Question 6. One of the potential advantages of EV deployment--
depending on a number of other regulatory variables--is the ability to 
leverage them for distributed storage, in manner that could assist in 
evening out supply/demand on the grid, enhancing the economics of 
intermittent generation and load shifting. I am aware that DOE is 
currently working on an energy storage roadmap.
    To what extent will the roadmap provide us with guidance on the 
economic and efficient integration of EVs with the existing power grid?
    Answer. The Department is developing a comprehensive energy storage 
strategy by mapping system operational needs of stability control, 
frequency regulation, ramping control, and bulk energy management to 
the relevant and appropriate storage technology characteristics. In 
finalizing this strategy for energy storage, and in conjunction with 
other Departmental planning activities for grid storage, the Department 
is focused on providing an integrated perspective on both 
mobileplatform storage technologies and the stationary grid energy 
system.
    The value of any energy storage technology derives from the 
operational needs of the system, and this value will be best realized 
when the functional characteristics of the storage technology are 
matched to the characteristics of these operational needs. This pairing 
of technology characteristics to system requirements becomes more 
complicated for instances such as EV batteries where the primary 
function is something other than grid storage. Dual use is a clear 
possibility, but the tradeoffs between primary vehicle requirements, 
secondary grid management requirements, and storage technology 
characteristics must be well understood and carefully considered from 
scientific, technical and economic perspectives so that the most 
effective and economically beneficial uses of the storage devices are 
enabled.
    DOE is currently investing $110 million in RD&D specifically 
focused on mobile platform applications, which is complemented by 
additional funding for storage activities ranging from basic science to 
commercial scale demonstrations. This is coordinated through an on-
going agency-wide energy storage working group, which ensures that 
challenges ranging from basic science to technology application are 
well understood across the Department.
    Question 7. S.3495 provides loan guarantee support for the 
aggregate purchase of batteries, solely for stationary applications. In 
your view, is there a reason why this provision should be limited to 
stationary applications, rather than more inclusive of mobile 
applications that may emerge as the smart grid and vehicle technologies 
continue to evolve?
    Answer. Battery purchases for mobile applications are currently 
incentivized indirectly through the tax credits offered for the 
purchase of electric vehicles and plug-in hybrid vehicles. While the 
provision in this legislation is limited to stationary applications, 
the batteries are nonetheless designed for vehicle applications. Thus, 
this provision provides a separate mechanism to help achieve economies 
of scale and therefore supports the overall objectives of the bill.
    Question 8. Researchers at MIT have found that the acceptance of 
Alternative Fuel Vehicles (AFV) by the public is not a simple process, 
and takes time. Even the Prius, which is doing well today, had a 
relatively slow start--and that is powered by gasoline! Acceptance of 
new technologies isn't just about building awareness, but about 
building enough knowledge, familiarity, and comfort among the carbuying 
public that people put an AFV into their ``consideration net''--the set 
of makes, models, etc. they actually consider when selecting their next 
vehicle.
    One of the most robust findings in the literature on adoption of 
innovations is that most people are ``imitators''--that is, they won't 
consider something novel until they see enough of their friends, 
colleagues, and others in their social networks doing it as well. Early 
adopters are helpful to get the ball rolling, but often not sufficient. 
Innovation adoption is enhanced when the innovation is highly visible, 
when its costs and benefits are easily evaluated, when it is easy to 
try the innovation at low cost, and when adoption is readily reversible 
(in case it turns out you don't like it after all).
    Compared to, say, consumer electronics like the iPod, automobiles 
rank poorly on all these dimensions. They are quite visible--but only 
after there are some already deployed so that people can see them 
driving down the roads in their neighborhoods or on their commutes. The 
costs (purchase price, typically higher than for conventional vehicles) 
are readily available, but the benefits (lower cost of fuel, quiet, 
better acceleration) are experienced only over time and are much less 
salient; the environment benefits are diffused and not personally 
experienced by the owner. Trial is not easy--test drives take effort 
and provide only limited experience, and no experience at all about the 
long-term reliability of the vehicle. And adoption is not readily 
reversible--automobiles are the second most expensive purchase most 
people ever make, and once you drive it off the lot it loses a lot of 
value.
    As DOE designs, recommends, and implements specific policies to 
encourage the deployment of electric vehicles, are you taking all of 
these hurdles into account? If so, how do the policies you propose 
address these hurdles? Please be specific.
    Answer. The Department of Energy (DOE) agrees that the development 
and adoption of innovative technologies is extremely challenging. 
However, equally challenging is the imperative to reduce petroleum 
dependence and greenhouse gas emissions. DOE does not discount lessons 
to be learned regarding consumer acceptance of new technologies but 
believes consumers are also concerned about the high cost and 
volatility of fuel prices, the transfer of wealth caused by petroleum 
use, and the impact of vehicles on the environment.
    DOE is working to address the challenges of electric drive vehicle 
deployment through a number of important education, training, and 
communications activities. The Transportation Electrification activity 
funded by the Recovery Act will result in the deployment of more than 
7,000 electric vehicles and provide education to a broad array of 
audiences. Communities where vehicles are deployed will have a high 
density of vehicles and charging stations, making them a fairly common 
sight to local citizens. In addition, related Transportation 
Electrification educational programs target undergraduate and secondary 
students, teachers, technicians, emergency responders, and the general 
public. Public and student workshops will raise familiarity and comfort 
levels with the new technology, technician training will ensure that 
early adopters have a positive experience with their electric vehicles, 
and emergency responder training will help assure the response 
community as well as the local public that not only are the vehicles 
safe, but they also can be handled safely in an accident response 
situation.
    In addition to the Recovery Act-funded Transportation 
Electrification efforts, DOE's Clean Cities Program facilitates local 
partnerships and provides consumers with accurate, relevant technical 
information on advanced transportation. The 87 Clean Cities coalitions 
nationwide work with more than 6,500 stakeholders to deploy alternative 
fuel and advanced technology vehicles, including electric vehicles, and 
comprise a network for sharing best practices and lessons learned. DOE 
provides coalitions with a vast set of information resources and 
technical assistance, and the coalitions provide local early adopters--
from fleets to consumers--with a set of trusted local experts to turn 
to for advice.
    DOE offers other publicly available information resources, 
including the Alternative Fuel and Advanced Technology Vehicle Data 
Center (AFDC) and fueleconomy.gov. Each has information, including cost 
calculators, to help consumers learn and make decisions about choosing 
alternative and fuel efficient vehicles.
   Responses of David B. Sandalow to Questions From Senator Landrieu
    Question 1. Can you please discuss the various technologies that 
exist to replace petroleumfueled vehicles? I know this hearing's focus 
is on electric vehicles, but I would like you to include natural gas 
vehicles and any other viable technologies in your answer.
    Answer. The Department of Energy's (DOE) petroleum reduction 
efforts in the transportation sector include a broad portfolio of 
alternative fuels and advanced vehicle technologies. Efforts to improve 
vehicle efficiency and fuel economy include new technologies such as 
hybrids and plug-in hybrids, advanced engine combustion designs and 
clean diesel applications, as well as creating lighter weight vehicles 
through advanced materials design. In addition, outreach and education 
efforts focus on reducing unnecessary wasteful idling for trucks and 
buses and encourage smarter driving practices for consumers.
    Technologies and efforts related to alternative fuels include a 
variety of nonpetroleum based fueling options. In addition to 
electricity, vehicles are available today that can be powered by 
natural gas, propane, ethanol, biodiesel, and hydrogen. DOE supports 
activities to accelerate the commercialization and deployment of these 
alternative fuel vehicles and related infrastructure.
    Question 2. Can you please compare these technologies for their 
carbon intensity, average cost to consumer and timeline for commercial 
activity?
    Answer. Vehicle carbon intensity is conveyed most usefully on a 
lifecycle basis, which considers both direct tailpipe emissions and 
indirect emissions for fuel production. In lifecycle terms, a mid-size 
conventional gasoline-fueled internal combustion vehicle emits about 
475 grams of carbon dioxide-equivalent per mile traveled. In 
comparison, a diesel version emits about 5% less; a dedicated natural 
gas vehicle emits about 25% less; and a gasoline hybrid version emits 
about onethird less. A Plug-in hybrid electric vehicle emits between 33 
and 80% fewer emissions depending on its all-electric range, how far it 
is driven and renewability of its fuel sources (renewable electricity 
and advanced biofuels). Fully electricdrive vehicles (battery-electric 
vehicles and fuel cell vehicles) reduce carbon intensity by about 40% 
on conventional electricity or hydrogen and 80% on renewable fuels 
(renewable electricity and renewable hydrogen).
    Cost to the consumer is also usefully conveyed on a lifecycle 
basis, which combines upfront vehicle purchase cost with fuel costs 
incurred during vehicle use. A mid-size conventional gasoline-fueled 
internal combustion vehicle costs approximately 30 cents per mile to 
operate, as does a dedicated natural gas vehicle, a hybrid vehicle, and 
a plug-in hybrid with a ?10-mile all-electric range. A diesel version 
costs slightly more. Currently, the lifecycle costs of fuel cell and 
all-electric vehicles are high compared to other alternatives. 
Additionally, it is worth noting that fuel costs for fossil fueled 
vehicles are subject to great variability while electricity rates are 
more stable, so greater uncertainty is associated with the cost to 
operate fossil-fueled vehicles.
    According to their public announcements, auto companies will begin 
to deploy plug-in hybrid electric and battery electric vehicles this 
year; fuel cell vehicle deployment is longer-term. In general, costs 
are expected to decrease as manufacturers increase production, thanks 
to increased familiarity with technologies and economies of scale. 
Additionally, laboratory research--which takes 3-5 years to be 
transferred to manufacturers and another 3-5 years for commercial 
availability--is expected to continue contributing to improved 
performance and lower cost of advanced technologies.
    Question 3. What can state and local communities be doing now to 
prepare themselves for the transition to plug-in electric vehicles?
    Answer. One important action for State and local communities is the 
formation of partnerships with relevant stakeholders, including 
electric utilities, local code officials and emergency responders, 
vehicle manufacturers and dealerships, infrastructure developers, and 
other local businesses. Forming partnerships is essential because 
electric vehicles affect so many different areas of a community, from 
the electric grid to parking garages. The Department of Energy's (DOE) 
Clean Cities Program provides a foundation, structure, and support for 
local stakeholder partnerships to advance the deployment of alternative 
fuel vehicles, including plug-in vehicles. Nearly ninety local 
coalitions now comprise the Clean Cities network, which enables 
communities to share best practices and communicate lessons learned. 
DOE supports Clean Cities coalitions with technical assistance and 
information resources.
    DOE continues to engage stakeholders to better understand how it 
can support local community efforts to deploy electric vehicles and 
infrastructure. On July 22, we will host an Electric Vehicle Community 
Readiness Workshop to hear from experts on key issues, including 
permitting, as well as best practices for accelerated deployment.
    Question 4. What are other countries doing to promote electric 
vehicles in their countries? What international markets, if any, are 
thriving?
    Answer. Countries around the world are investing heavily in 
electric vehicle (EV) and battery technology. For example, as reported 
by the AFP, China committed $1.5 billion to EV and battery R&D in its 
national research plan.\6\ According to reports, China has also taken 
the following steps to promote EVs:
---------------------------------------------------------------------------
    \6\ ``China issues stimulus package for auto sector: state media,'' 
January 14, 2009, AFP.

   Through the 2008 Chinese stimulus package municipal 
        governments and taxi fleets were offered subsidies of up to 
        $8,800 per EV.\7\
---------------------------------------------------------------------------
    \7\ ``China vies to be world leader in electric cars,'' April 1, 
2009, New York Times. http://www.nytimes.com/2009/04/02/business/
global/02electric.html
---------------------------------------------------------------------------
   The State Council set an EV annual production capacity 
        target of 500,000 units by 2011.\8\
---------------------------------------------------------------------------
    \8\ Id.
---------------------------------------------------------------------------
   China's Ministry of Finance announced a pilot program in 
        five cities to subsidize the purchase of electric and hybrid 
        cars.\9\ Consumers in those urban areas can receive about 
        $8,785 off the price of a battery car and about $7,320 off 
        plug-in hybrids.\10\
---------------------------------------------------------------------------
    \9\ ``China to subsidize electric, hybrid car purchases in five 
cities,'' June 1, 2010, Xinhua News Agency. http://news.xinhuanet.com/
english2010/china/2010-06/01/c_13327814.htm
    \10\ Id.

    Bloomberg reports that Germany pledged to spend $705 million on EV 
development by 2011, with a goal of putting 1 million EVs on the road 
by 2020.\11\ According to the International Energy Agency (IEA), 
Denmark set an EV sales target of 200,000 by 2020.\12\ And, according 
to reports, the European Commission is focused on ensuring 
interoperability across the continent and is currently in the process 
of setting standards for charging electric vehicles.\13\
---------------------------------------------------------------------------
    \11\ ``Germany pledges $705 million to boost electric cars,'' 
August 19, 2009, Bloomberg. http://www.bloomberg.com/apps/
news?pid=newsarchive&sid=aoey..OnNzmY
    \12\ International Energy Agency, Technology Roadmap: Electric and 
Plug-in Hybrid Electric Vehicles. IEA: Paris. 2009. https://
www.iea.org/Papers/2009/EV_PHEV_Roadmap.pdf
    \13\ European Commission Enterprise and Industry Directorate-
General, Roadmap on Regulations and Standards for the Electrification 
of Cars. 2010. http://ec.europa.eu/enterprise/sectors/automotive/files/
pagesbackground/competitiveness/roadmap-electriccars_en.pdf
---------------------------------------------------------------------------
    The IEA reports that Israel has committed to selling between 40,000 
and 100,000 EVs by 2012.\14\
---------------------------------------------------------------------------
    \14\ Supra note 7.
---------------------------------------------------------------------------
    The IEA reports that many countries are working to implement 
strategic goals for deployment of EVs, and several have publicly 
announced targets for EV sales. Some examples include:

   Canada--500,000 EVs by 2018
   China--540,000 EVs by 2015
   Denmark--200,000 EVs by 2020
   France--2,000,000 EVs by 2020
   Germany--1,000,000 EVs by 2020
   Israel--40,000 EVs by 2011
   Spain--1,000,000 EVs by 2014
   Sweden--600,000 EVs by 2020\15\
---------------------------------------------------------------------------
    \15\ Id.
---------------------------------------------------------------------------
   Responses of David B. Sandalow to Questions From Senator Sessions

    Question 1. If we are looking for the fastest pathway to energy 
security, doesn't it make sense to promote all near-term clean vehicle 
technology including fuel cells? Wouldn't it be a mistake to pick 
winners and losers this early?
    Answer. Although the Department of Energy places some emphasis on 
electric drive technologies, we do not feel that we risk freezing 
industry investments in fuel cells or other advanced vehicle 
technologies. Working together with industry partners, the Department 
continues to pursue a portfolio of near-and long-term advanced 
transportation technologies that can reduce petroleum consumption and 
mitigate greenhouse gas emissions, and electric drive technologies are 
a critical component of that portfolio. Electric drive vehicles include 
hybrids and plug-in hybrids that use biofuel and renewable electricity, 
full electric vehicles recharged with renewable electricity, and fuel 
cell vehicles that use renewable hydrogen. These variations of electric 
drives share component technologies, so advancements in plug-in hybrid 
power electronics, for example, also support and advance the 
development of fuel cell vehicles. Similarly, advanced technologies 
such as vehicle lightweighting and advanced combustion engines can 
significantly increase vehicle fuel economy and are an important part 
of a hybrid electric system. Continued development is essential to 
further increasing the fuel efficiency of hybrid electric vehicles.
    Question 2. What will be the impact of plugging in additional 
sources to our current electrical grid? Will there need to be 
additional power generation? If so, since most of our electricity is 
produced from coal, would the CO2 reductions from plug in 
vehicles result in an actual reduction of greenhouse gas emissions?
    Answer. The U.S. electric power infrastructure is designed to meet 
peak demand, plus an additional margin, and is thus underutilized 
during much of the 24 hour daily cycle. The idle capacity of the grid 
could supply a significant portion of the energy needs of today's 
light-duty vehicles without adding generation or transmission if these 
vehicles are re-charged during off-peak periods.
                                 ______
                                 
  Responses of Frederick W. Smith to Questions From Senator Murkowski

                           GRID CAPABILITIES

    Question 1. In your written testimony, you mentioned an EPRI study 
that ``found that plugging in just one PHEV to charge at 220 volts 
overloaded 36 of 53 transformers examined during peak hours and 5 of 53 
transformers during off-peak hours.'' It would be wonderful if electric 
vehicle owners were able to charge their cars overnight--from, say, 
midnight to six a.m.--but it seems unrealistic to expect that to 
happen.

          a. Can you describe the sort of local-level grid improvements 
        that will be necessary to handle a significant number of 
        electric vehicles, and how much those improvements might cost?

    Answer. Generally speaking, the distribution system is capable of 
handling the load from the charging of electric vehicles (EVs) and 
plug-in hybrid electric vehicles (PHEVs). The primary open question is 
the extent to which local neighborhood transformers can handle the 
additional load from these vehicles. One recent analysis from the 
Electric Power Research Institute (EPRI) did find that, in some 
communities, smaller transformers serving between five and seven homes 
could be easily overloaded by charging PHEVs at 240V (Level II 
charging). Specifically, plugging in one PHEV during peak times 
overloaded 25kVA transformers in 36 of 53 cases examined. During 
offpeak times, the number of 25kVA transformers that were overloaded by 
plugging in one PHEV fell to 5 of 53.
    In the EPRI analysis, the distribution-system impact of plugging-in 
PHEVs varied significantly depending on time of day, size of 
transformer, and how many cars were charged simultaneously. In general, 
larger transformers were also affected, but not as frequently as 
smaller transformers. The 50kVA transformers examined by EPRI were 
overloaded by charging one PHEV during peak hours in just 5 of 103 
cases examined--though the number increased to 36 instances if three 
PHEVs were charged simultaneously.
    Routinely overloading transformers is a serious issue that will 
result in an acceleration of the rate at which they depreciate. 
Therefore, in instances where transformers are too small to support the 
load from EVs and PHEVs, they would need to be upgraded. Such upgrades 
are routine for utilities, and the costs of these improvements 
generally are recoverable by including them in their rate base. It is 
primarily a question of planning and organization. Because the need to 
upgrade transformers varies widely by system design and location, it is 
difficult to provide a national estimate for cost of replacement. Of 
course, the rate at which PHEVs and EVs penetrate the market, and the 
extent to which these vehicles are charged using smart grid technology, 
will also determine the rate at which transformers must be replaced in 
some cases.

          b. During our committee's hearing, an alert went out asking 
        Senate offices to conserve power (through dimming lights, 
        shutting off computers, and otherwise reducing demand) due to 
        the intense heat and humidity. Do you foresee eventual 
        restrictions on charging during peak hours, much in the same 
        way that communities with water shortages sometimes restrict 
        daytime watering?

    Answer. Neither the Electrification Coalition nor I personally 
would be comfortable ``restricting'' the ability of consumers to refuel 
their vehicles. That said, we clearly acknowledge the benefits of 
incentivizing consumers to charge their batteries during utilities' 
offpeak operating hours. As you know, demand for electricity is 
uniformly lower at night than during the day. Research from a variety 
of national laboratories and other institutions has demonstrated that 
the need to construct new electric power generation capacity can be 
minimized or eliminated for the foreseeable future depending on how 
closely vehicle charging patterns adhere to offpeak charging scenarios. 
(An additional and critical factor is the extent to which vehicles are 
charged using smart grid technology for load management.)
    Therefore, while we recognize that vehicle charging may take place 
around the clock based on when consumers need to charge, we believe 
that it is appropriate to design the system so that drivers have a 
strong incentive to charge overnight. This will minimize the effect 
that EVs and PHEVs have on peak power demand, which in turn will 
minimize the need to construct new power generation capacity and/or to 
upgrade local transformers. The primary tool to incentivize offpeak 
charging is likely to be time of day pricing for electricity used to 
charge EVs and PHEVs. By offering rates for power to charge vehicles 
that are substantially lower during the overnight hours than at other 
times, we believe that consumers can be incentivized to charge their 
vehicles overnight in most cases. This, of course, is one of the 
strategies that should be tested in deployment communities.

                               COST SHARE

    Question 2. S. 3495 requires at least a 20 percent non-federal 
cost-share, which can be lowered at the discretion of the Secretary of 
Energy. Do you believe a higher cost-share (greater than 20 percent) 
would help ensure that only the most financially-sound communities--
communities that can continue to promote electric vehicles and 
infrastructure once temporary federal funding has ended--are selected?
    Answer. We recognize the fiscal appeal of a cost-share, 
particularly from the perspective of the federal government. In 
general, the 20 percent cost-share contained in S. 3495 ensures that 
communities applying for selection as deployment communities have a 
stake in making the program successful. We believe that the bill also 
provides the Secretary of Energy with important flexibility to balance 
selecting fiscally sound communities with selecting the most 
appropriate communities.
    We believe that the most important factors to consider in choosing 
deployment communities are:

          1. Ability to demonstrate that the community can successfully 
        deploy EVs and PHEVs in numbers that represent penetration of 
        the mainstream automobile market;
          2. Commitment from a broad range of stakeholders, including 
        utilities, utility regulators, state government officials, 
        local government officials, large local employers, 
        universities, etc.;
          3. Supportive regulatory environment that includes time-of-
        day pricing, ability for utilities to invest in necessary IT 
        and infrastructure upgrades, and ease of permitting/ 
        installation for consumers' home level 2 chargers; and
          4. A plan for siting, installing, and networking Level II and 
        Level III public charging infrastructure.

    The U.S. effort to develop an electric vehicle industry is an 
undertaking of national importance and is deserving of national 
support. Ultimately, this is about the country's economic 
competitiveness and energy security. Particularly today--as state and 
local governments struggle to deal with the worst impacts of the most 
severe economic recession in a generation--it would be a mistake to 
over emphasize fiscal position in selecting deployment communities. The 
priority must be on those regions that can demonstrate the clearest 
path to success, while also ensuring geographic and demographic 
diversity.

                      SPENDING AND OIL PRODUCTION

    Question 3. In your written testimony, you discuss the budgetary 
constraints we are facing and the increasing difficulty of producing 
oil. I certainly agree with your comments about the budget and how 
difficult it is to justify any additional deficit spending right now. 
But I also believe that we have placed short-sighted limits on where 
oil can be produced in America.
    In Alaska, there are tens of billions of barrels of oil that can be 
produced in onshore and shallow water areas such as the Coastal Plain 
of ANWR, NPR-A, and the Beaufort and Chukchi Seas. The production of 
those reserves would also yield massive revenues for the federal 
government, which could in turn be used to pay for legislation such as 
S. 3495. Couldn't we solve both problems--our near-term need for oil 
and the ongoing shortfall in revenues--by increasing domestic 
production where it can be accomplished in the safest possible manner?
    Answer. As you know, in addition to my participation in the 
Electrification Coalition, I am the co-Chair of the Energy Security 
Leadership Council (ESLC). The Council is a group of prominent business 
leaders and retired senior military officers dedicated to reducing U.S. 
oil dependence for economic and national security reasons. The Council 
has a well-established track record of support for a balanced national 
energy strategy--one that includes expanded production of domestic oil 
and natural gas.
    Over the long-term, the Council believes that reducing the oil 
intensity of the U.S. economy is the only way to meaningfully improve 
our energy security. This reduction in oil intensity requires limiting 
the growth in total oil demand--or, in fact, reducing demand--as the 
economy grows. This metric is not based on differentiating between 
domestic oil and imported oil. Instead, it focuses simply on increasing 
the number of units of GDP that are produced for each barrel of oil 
consumed. The U.S. has had success improving our oil intensity in the 
past: between 1973 and 1985, it dropped by nearly 40 percent.
    Our focus on oil intensity is based on a simple reality: the most 
damaging aspect of our reliance on oil is the extreme volatility of oil 
prices, particularly given that we use so much oil and that there are 
essentially no substitutes available to consumers today. Simply put, as 
oil prices rise and fall, consumers' ability to shift driving and 
consumption patterns is extremely limited, leaving them fully exposed 
to the uncertainty posed by rapidly changing prices. This makes it hard 
for businesses and households to save, plan, and invest, thereby 
disrupting economic activity. It is important to recognize that this is 
true regardless of whether the oil we consume is produced domestically 
or not. There is a fungible, global market for oil with a small set of 
benchmark prices.
    However, an additional and significant component to the economic 
cost of U.S. oil dependence is the impact that oil importation is 
having on our trade deficit. In 2008, imports of crude oil and 
petroleum products accounted for 56 percent of the total U.S. trade 
deficit. At $388 billion, the petroleum deficit was larger than our 
deficit with any national or regional trade partner. In 2009, a year 
marked by reduced oil demand and a lower average global oil price, the 
U.S. still ran a deficit of roughly $200 billion in petroleum imports. 
In 2010, based on import levels and oil prices to date, our deficit in 
oil imports is expected to return to pre-crisis levels of nearly $300 
billion. I view this as a substantial threat to the U.S. economy going 
forward. Of course, this says nothing of the national security impact 
of exporting several hundred billion dollars of national wealth abroad 
each year, some to unstable or hostile regimes.
    Therefore, the domestic production of oil and gas is--and should 
remain--a critical component of any U.S. energy security strategy, 
including domestic production in Alaska. The transition to a 
transportation sector that is no longer heavily reliant on petroleum 
will take decades. While we focus on policies and investments necessary 
to facilitate this transition, we should also work to minimize the 
share of our oil demand that is met by imports. This will not only work 
to improve our trade deficit and strengthen national security, but it 
can provide the state, federal, and local governments with much needed 
taxes and royalty fees.

                      TARGETED DEPLOYMENT PROGRAM

    Question 4. A targeted deployment program could help deploy 
vehicles and infrastructure within communities, but it would do little 
to assist with long-distance driving. What do you think can and should 
be done to facilitate intercity road trips in electric vehicles?
    Answer. First, I would simply point out that different electric-
drive vehicles will face different challenges regarding longer trips. 
For example, PHEVs and extended range electric vehicles (E-REVs) like 
the Chevy Volt operate on a combination of electricity drawn from the 
grid and either electricity or mechanical energy generated onboard from 
a gasoline powered engine. These vehicle architectures allow for 
essentially unlimited vehicle range subject to the availability of 
gasoline, as with any gasoline powered vehicle on the road today.
    Pure electric vehicles, however, will have a limited range between 
charges, which will impact their ability to travel longer distances in 
the absence of any charging infrastructure. The distance that electric 
vehicles can travel on a single charge will change over time, but today 
ranges from roughly 100 miles for the Nissan Leaf to more than 200 
miles for the Tesla Roadster. Electric vehicles announced or on the 
road around the world and produced by OEMs like Mitsubishi, Renault, 
and BMW can travel distances roughly similar to the Nissan Leaf. 
Although vehicles with these ranges will meet most drivers' needs on 
most days, many drivers will also want the ability to driver farther 
than the vehicle's range on a single charge.
    There are several approaches to facilitate long distance travel in 
electric vehicles. Fast chargers, which supply direct current at 
voltages up to 480 volts, will have the ability to charge a vehicle 
battery in several minutes as opposed to the several hours required for 
a 220 volt alternating current charge. Because of their expense and 
power requirements, the deployment of fast chargers will practically be 
limited to commercial facilities, such as fast charge stations akin to 
today's gas stations. Deployed in charging stations along intercity 
highways, they will facilitate intercity travel for electric vehicles.
    Battery swapping also is an option to extend the range of electric 
vehicles. Better Place, a provider of electric vehicle networks and 
services, has developed a business model in which it will support 
electric vehicles designed to include swappable batteries. The 
technology is currently being demonstrated in a small fleet of taxis in 
Tokyo, Japan. Placing battery swap stations along intercity corridors 
would facilitate intercity travel by electric vehicles.
    Because of the importance of facilitating intercity travel, and 
because of the questions about how to extend the range of electric 
vehicles, I believe that it is important that at least one--possibly 
more--of the deployment communities selected be a corridor that 
connects several mid-sized communities. Such an approach would 
facilitate a better understanding of the issues and solutions 
surrounding intercity travel for electric vehicles.

                         TAX CREDITS VS. GRANTS

    Question 5. This bill contains a variety of grant funding, and it 
is my understanding that tax provisions could be added to it during 
floor debate. Do you believe that one of those forms of support is more 
appropriate and more relevant to the advancement of electric vehicles? 
Is it important to maintain a mix between tax credits and federal 
grants?
    Answer. Perhaps the most important attributes of vehicle and 
infrastructure incentives is that they be transparent, usable, and 
immediate. If consumers can easily obtain the information they need 
about the applicability and duration of the incentive, they can make 
use of it without enduring an overly burdensome process, and they can 
capture it quickly, the incentive will have a positive effect. This 
kind of incentive provides much needed certainty for both producers and 
consumers.
    One need only study the history of the wind power industry in the 
U.S. to see how and why incentives can fail. First, the wind production 
tax credit (PTC) was often in flux, expiring in one year only to return 
the next. In years when the PTC was allowed to expire, installation of 
new turbines plummeted, interrupting investment in the technology. 
Second, the credit was not always usable, because many of the companies 
willing to invest in wind turbines were relative young start-ups that 
had yet to realize a profit. As such, they had little use for a credit 
that could only be taken against taxes on income. In both cases, the 
industry developed workarounds, but it took several years and 
tremendous coordination among the various stakeholders.
    That said, we would argue that both tax credits and grants have a 
role to play in supporting electrification in general and a deployment 
community approach in particular. However, it is important that each of 
these incentives be used where it can have the greatest impact. For 
those incentives that should be uniform across the program, such as 
incentives for vehicles and charging infrastructure, incentives should 
primarily be offered through the tax code, which offers uniformity and 
the greatest degree of certainty to the industry. One of the most 
important components of the bill is the inclusion of a vehicle 
incentive for consumers in the form of a transferable tax credit or 
point-of-sale rebate. These policies, or something like them, must be 
included in any final bill.
    In addition to the incentives for vehicle and infrastructure, 
successful deployment communities will have to engage in a wide variety 
of other activities to support the rollout of EVs and PHEVs. For 
example, communities might want to survey the status of their 
electrical distribution system, offer non-monetary incentives to 
drivers of EVs and PHEVs, train first-responders how to interact with 
EVs and PHEVs safely, and initiate consumer education efforts and 
marketing campaigns. Such efforts would best be supported by grants, 
because their flexibility allows for each community to meet its own 
needs in its own way. We also believe that research regarding electric 
drive vehicles and their associated infrastructure and support systems 
is best supported by grants.

                           BATTERY TECHNOLOGY

    Question 6. One of the biggest hurdles to the development of 
electric vehicles is the cost of their batteries, which adds greatly to 
the price of the vehicle itself. Can you share your views on how 
quickly batteries will advance over the next decade, and what that will 
mean for their cost?
    Answer. Battery cost and performance issues are certainly among the 
most critical issues that must be addressed for electrification to 
succeed. I am, however, optimistic in the progress that can be made in 
relatively short order on both fronts.
    First, a main contributor to battery cost is the current lack of 
production volume, or scale. The highest estimates of current battery 
costs are often based on small batch production volumes. Most OEMs and 
battery suppliers are currently utilizing a manufacturing process 
geared for small pilot programs. However, based on expected demand for 
the first EVs and PHEVs to hit markets in late 2010 and 2011, some OEMs 
are shifting to larger production volumes that will help drive costs 
down rapidly. Data from the Department of Energy suggests a plant that 
is capacitized to produce 100,000 battery packs per year will have 
battery costs that are 38 percent to 44 percent lower than a 10,000 
unit plant.
    I would also note that current supply chain structures also contain 
some cost inefficiencies. For example, the lithium ion cells for the 
Chevy Volt are currently produced by LG Chem in South Korea. They are 
then shipped to Michigan and installed into the final battery packs. 
The structure and distribution of the lithium ion cell industry 
necessitated GMs early approach. However, the company has announced 
plans to move cell production facilities to the U.S. in 2012, a step 
which will provide significant cost savings.
    Based on these and other cost saving measures that are expected in 
the next several years, industry observers and analysts are forecasting 
meaningful reduction in lithium ion battery costs by 2020. For example, 
a recent analysis conducted by TIAX, LLC found future costs between 
$212-$568/kWh for a PHEV battery with 6.9 kWh of total energy (roughly 
a PHEV-25). The analysis incorporated a range of variables across four 
current battery chemistries produced at high volumes--500,000 units per 
year.
    Another issue related to cost and performance is battery 
utilization. In particular, some current PHEV batteries utilize a 50 
percent state-of-charge window. That is, a PHEV-40 battery today is 
designed to require only 8 kWh of its16 kWh capacity in order to travel 
40 miles in pure electric mode. This practice comes at significant 
cost, driving current battery prices higher than technical 
requirements. In first-generation applications, PHEV manufacturers made 
the strategic decision to add extra capacity in order to ensure end-of-
life performance metrics and meet battery warranty requirements. 
However, advancements already achieved have reduced the need to over-
specify PHEV batteries and expanded the state-of-charge window, thereby 
reducing costs for the next generation of assembled battery packs. 
There also is the possibility of breakthrough technologies that will 
fundamentally change the cost equation for batteries. My recent meeting 
with the Director of ARPA-E was extremely encouraging in that regard.

                             RAW MATERIALS

    Question 7. I've often expressed concern that if we do not develop 
our own resources, we risk trading our dependence on foreign oil for a 
similarly devastating dependence on foreign minerals. Do you share that 
concern? As the United States government looks at ways to promote 
electric vehicles, how would you recommend addressing it?
    Answer. This is an important question, and it's one that we at the 
Coalition take very seriously. We agree that it is critical that the 
U.S. does not trade one national security risk for another. In our 
analysis, however, that is not going to be the case with 
electrification.
    Concerns about lithium dependence tend to ignore a key feature of 
lithium--its recyclability. Research from Argonne National Laboratory 
shows that, when recycling is factored-in, global lithium reserves are 
adequate to support even the most bullish GEV deployment scenarios. The 
vast majority of material in lithium ion batteries is recyclable. 
Today, recycling rates for lithium are relatively low, but that has a 
lot to do with the small quantities of lithium found in most consumer 
electronics applications. There simply isn't a value proposition for 
recycling in such small quantities. But a lot of work is going into 
developing business models around recycling lithium from large format 
automotive batteries. In fact, battery recycling operations were among 
the recipients of ARRA stimulus funds.
    Recyclability differentiates lithium from oil. Once an oil or 
natural gas molecule is combusted in a vehicle's engine, its energy 
potential is gone forever--hence the term, ``non-renewable resource.'' 
Lithium is not a non-renewable resource. Instead, it is a storage 
device. Therefore, dependence on lithium is much different than 
dependence on oil. Vehicles do not deplete batteries as we drive; they 
deplete the energy stored within them. In other words, batteries are 
like the engines in conventional vehicles of today; though their life 
span is finite, they last for many years. Coupled with the fuel 
diversity of the electric power sector, grid-enabled vehicles insulate 
consumers from volatile commodity markets and related phenomena like 
oil shocks. So, there is a critically important structural difference.
    The global market is also not as one-dimensional as some critics 
suggest. Annual production of lithium totaled about 30,000 tons in 
2008. The top producers were Chile, Australia, China, Argentina and the 
U.S. Total identified world lithium resources stand at around 13.4 
million tons, according to USGS. The two largest reserves holders are 
Bolivia and Chile, though Bolivia has yet to produce lithium in 
commercial quantities. Still, reserve estimates must be understood in 
the context of demand, which has thus far required only the cheapest 
and most accessible lithium to be developed. The U.S. Geological Survey 
identifies substantial lithium deposits in places as diverse as 
Austria, Afghanistan, India, Spain, Sweden, Ireland, and Zaire, but has 
not yet classified these deposits. Reserves also do not include the 
large quantities of lithium known to exist in oilfield brines in the 
western United States and in hectorite clays. Indeed, even the sea 
holds large quantities of dissolved lithium.
    Finally, it's true that a number of rare earth metals are vital to 
GEV production. While China currently produces over 95 percent of rare 
earth oxides, it holds about 30 percent of known reserves. The United 
States actually holds substantial reserves, but has opted to import 
Chinese supplies since the 1990s due to cost. One company, Molycorp, 
plans to reopen a significant U.S. mine at Mountain Pass, California. 
Still, it's also true that global demand for rare earths is expected to 
grow rapidly in coming years--by around 15 percent annually for magnets 
and 20 percent for alloys--causing worry of a shortage and Chinese 
monopolistic manipulation. Beijing has recently enacted stringent 
export tariffs and quotas on unprocessed materials in an effort to 
ensure that all value-added processing, especially hard magnet 
production for batteries, occurs domestically.
    This warrants close monitoring and an ongoing dialogue on trade 
with China. But I would argue that the threat of rare earth dependence 
pales compared to oil dependence. At the end of the day, manipulation 
or disruption of the rare earth market could make vehicle manufacturing 
more costly, but it wouldn't instantly disrupt the hundreds of millions 
of vehicles on the road at any given point in time the way an oil 
disruption can and has.
                                 ______
                                 
     Responses of Kathryn Clay to Questions From Senator Murkowski

                           ELECTRIC VEHICLES

    Question 1. Aside from the Chevy Volt, Nissan Leaf, Ford Focus 
Electric, Tesla Model S, the Fisker Karma, and the CODA, can you 
describe the types of electric vehicles that may be commercially 
produced in the next five to ten years? Can you provide a general 
comparison of the range and cost of these vehicles, to the extent that 
those details have been made public?
    Answer. Automakers have announced plans to launch a range of 
electric drive vehicles over the next five to ten years. Electric drive 
vehicles include a range of vehicle configurations that vary the 
relative amount of motive power derived from a battery or fuel cell and 
an electric motor, and a gasoline fuel tank and engine. Idle-stop 
configurations, for example, draw power from the battery when the 
vehicle is stopped to eliminate idling.
    Plug-in hybrid and extended range electric vehicle configurations 
allow the vehicle to operate in charge depleting or charge sustaining 
mode. Under charge depleting mode, the vehicle runs in all-electric 
mode using the electric motor to drive the wheels until the battery is 
depleted, and then switches over to receive power from the gasoline 
tank and engine. Under charge sustaining mode, the vehicle switches 
back and forth between the electric motor and the gasoline engine in a 
way that is designed to maximize vehicle efficiency.
    The all-electric range of any vehicle is dependent on many factors, 
including the battery technology used, the vehicle weight and design, 
environmental factors, and driving behavior.

                             BATTERY BUBBLE

    Question 2. According to some recent news reports, the United 
States may already be on the verge of producing far more advanced 
batteries than electric vehicles. Do you see any evidence of this 
happening? What are the likely consequences if too many batteries are 
produced? What can we do to ensure there is no supply-demand gap for 
batteries?
    Answer. It is unlikely that battery manufacturers will produce more 
advanced batteries than are required for the electric drive vehicle 
market. Contracts between battery manufacturers and automobile makers 
will allow battery producers to match their production to demand. It is 
possible that there may be excess capacity in battery manufacturing 
worldwide compared to the number of electric vehicles entering the 
market.
    Excess manufacturing capacity could have the effect of depressing 
prices for advanced batteries and could affect the profitability of 
battery manufacturers. If suppliers of advanced automotive batteries 
also supply other end-use markets besides automobiles, this 
diversification could help mitigate the risks associated with 
attempting to predict future production numbers of electric drive 
vehicles.

                      TARGETED DEPLOYMENT PROGRAM

    Question 3. A targeted deployment program could help deploy 
vehicles and infrastructure within communities, but it would do little 
to assist with long-distance driving. What do you think can and should 
be done to facilitate intercity road trips in electric vehicles?
    Answer. Developing alternative fuel and charging corridors to link 
urban centers could facilitate intercity travel using plug-in electric 
vehicles. An example of this approach is underway in a cooperative 
effort by the states of California, Washington, and Oregon. In 
September 2008, these states signed a Memorandum of Understanding, 
agreeing to work together to foster the use of alternative fuel 
vehicles by developing the distribution network for alternative fuels 
along the I-5 corridor. The memorandum lays out common goals, a work 
plan and activities designed to further the development of this 
alternative fuels corridor. Similar efforts in other states, with 
federal and local government involvement, will be useful to enabling 
intercity travel using electric drive and other alternative fuel 
vehicles.

                              COLD WEATHER

    Question 4. According to news reports, the BMW Mini-E loses quite a 
bit of battery capacity in cold temperatures. Can any of you provide an 
update on efforts to overcome the difficulties that some electric 
vehicles may encounter in cold climates, particularly in an Arctic 
state like Alaska?
    Answer. Advanced batteries, such as lithium ion, provide somewhat 
shorter vehicle ranges at colder temperatures. The amount of this 
effect will vary depending on several factors, including vehicle 
design, the specific battery chemistry, and the vehicle systems that 
manage, heat, and cool the battery. Different lithium ion batteries 
will be affected differently by colder operating temperatures. 
``Lithium ion'' does not refer to single battery chemistry but rather 
to a family of related chemistries, each with slightly different 
attributes including temperature tolerance.
    For the current generation of lithium ion battery packs, and 
depending on the factors mentioned above, vehicle range may be 
diminished by 20 to 50 percent in cold weather driving conditions. Cold 
weather tolerance is an area of active research in battery technology 
development. Further work is also underway to improve vehicle systems 
that maintain battery temperatures to improve performance.

                         TAX CREDITS VS. GRANTS

    Question 5. This bill contains a variety of grant funding, and it 
is my understanding that tax provisions could be added to it during 
floor debate. Do you believe that one of those forms of support is more 
appropriate than any other? Is it important to maintain a mix between 
tax credits and federal grants?
    Answer. Tax credits and grants are each important to facilitating 
the production and consumer acceptance of new technologies. Ideally, 
these two policy approaches should be aligned to be mutually 
reinforcing. Both types of policy measures should be technology neutral 
to the extent possible. For example, tax credits could be provide to 
purchasers of any advanced technology vehicle meeting a set performance 
standard.

                           CHARGING STATIONS

    Question 6. How many charging stations do you believe will need to 
be installed for every electric vehicle put on the road?
    Answer. Because electric drive vehicles are only now emerging as a 
market, there is virtually no real world consumer data to allow us to 
predict with certainty what consumers demands will be in terms of 
access to charging infrastructure. Automakers believe that the majority 
of vehicle charging will take place in consumer's homes. After home 
charging, access to charging at the workplace will be the next most 
important factor in consumer acceptance, followed in importance by 
publicly available charging stations.
    Accordingly, each electric drive vehicle will require, at a 
minimum, Level 2 (220/240 volt) charging equipment at the location 
where the vehicle is parked overnight. Home charging is the fundamental 
need for all plug-in electric drive vehicle owners and facilitating 
access to home-based charging should be the first priority in 
establishing an electric vehicle charging infrastructure that is best 
able to encourage early acceptance of the technology.
    While home charging alone will be sufficient for some consumers, 
other consumers will also require access to charging at the workplace. 
These consumers will need two dedicated Level 2 chargers (one at home 
and one at work). Access to publicly available charging would be used 
for example, to facilitate inter-city trips, or for days when the 
consumer's driving exceeds their normal routine.

                             CHARGING TIMES

    Question 7. Right now, most gas-powered vehicles can be fueled in 
less than 10 minutes, and then drive for hundreds of miles. A drawback 
for electric vehicles is that they take hours to fully recharge. Even 
quick charging, which reduces battery life, can take at least 20 
minutes. Can any of you discuss any changes to charging time that you 
see over the next several years?
    Answer. Automakers anticipate that ``fast'' charging (Level 3, or 
480 volt charging) will be used by most electric drive vehicle owners 
only occasionally, on infrequent occasions when their driving needs for 
a particular day exceed their normal requirements. The lifetime of 
today's battery technologies is diminished slightly when charged at 
high rates; however, if fast charging is only used occasionally the 
overall effect on battery lifetime is unlikely to be significant. It 
will be important to educate consumers on the relationship between the 
use of high rates of charge and consequences for battery lifetime.
    Over the next several years, battery development work will address 
the need to increase the amount of energy batteries can store per unit 
weight (i.e. energy density), battery lifetime, and the ability of 
batteries to receive higher levels of power safely.

                           PACE OF DEPLOYMENT

    Question 8. Hybrid electric vehicles debuted a decade ago, are 
popular with consumers, and currently account for about three percent 
of the light duty vehicle market. Is it reasonable to expect that 
electric vehicles will deploy at a much faster rate?
    Answer. Hybrid electric vehicles first entered the U.S. market over 
a decade ago, and currently account for about three percent of the 
light duty vehicle market. These batteries onboard these 
``conventional'' hybrid vehicles do not receive energy from the 
electrical grid, but are instead recharged using energy derived from 
on-board gasoline tanks. Consequently, these vehicles do not require 
consumers to have access to a new charging infrastructure.
    Plug-in electric drive vehicles will require new infrastructure to 
make these vehicles acceptable to consumers. As discussed in our answer 
to question six above, each of these vehicles will require, at a 
minimum, access to charging equipment where the vehicle is parked 
overnight. The pace of deployment will depend on the strength of 
policies to support the establishment of a charging infrastructure.
    The pace of deployment of electric drive vehicles will also depend 
on regulatory efforts that support our national goals of energy 
security and climate change mitigation, and encourage automakers to 
invest in these technologies. As noted in our testimony, the issue of 
how upstream emissions will be treated in future rulemakings is a 
crucial factor affecting automakers decisions about future production 
of electric drive vehicles. Until we significantly alter how we produce 
electricity, including upstream emissions in the vehicle greenhouse gas 
emissions standards means that electric vehicles will rate only 
marginally better than conventional internal combustion engines, and 
comparatively worse than conventional hybrids.
    As a result, including upstream emissions creates a huge 
disincentive for producing electric vehicles versus other less costly--
and less game-changing--technologies. This approach would also be 
unfair because it would treat plug-in vehicles differently than other 
end-uses of electricity, making vehicle manufacturers uniquely 
responsible for utility emissions--emissions over which automakers have 
no control.

                           BATTERY TECHNOLOGY

    Question 9. One of the biggest hurdles to the development of 
electric vehicles is the cost of their batteries, which adds greatly to 
the price of the vehicle itself. Can you share your views on how 
quickly batteries will advance over the next decade, and what that will 
mean for their cost?
    Answer. The Department of Energy (DOE) estimates that the typical 
cost for advanced automotive lithium ion batteries is $1000 per 
kilowatt-hour (kWh) and has set a goal of reducing this cost figure to 
$300 per kWh. This figure was developed in part through consultation 
with auto industry participants, and the industry believes that this 
degree of cost reduction would significantly increase consumer 
acceptance of the electric drive vehicles.

                      TARGETED DEPLOYMENT PROGRAM

    Question 10. Section 106 of this legislation would create a 
targeted deployment program for five to 15 communities, to be chosen 
within one year of enactment. Many manufacturers have already selected 
initial retail markets for their electric vehicles; an example is 
Chevrolet, which selected Michigan, California, and Washington, DC for 
the Volt. Do you believe that the short timeframe of this bill and the 
select markets will advantage certain communities and disadvantage 
others during the selection process?
    Answer. Individual automakers have identified early markets for 
their electric drive vehicle models. These companies have chosen 
regional markets or cities to focus their first efforts for launching 
these vehicles. As automakers learn more about the potential customer 
base for these vehicles, and as new markets emerge, each company will 
modify their marketing and deployment efforts to emerging 
circumstances.
    At this early stage of electric vehicle deployment, automakers must 
remain highly flexible and responsive to the market. More real world 
learning is needed before any entity, public or private, will be able 
to identify which areas of the country will have the highest adoption 
rates of electric drive vehicles or the greatest needs for charging 
infrastructure investment.

                         TECHNOLOGY NEUTRALITY

    Question 11a. As introduced, S. 3495 would authorize nearly $6 
billion for electric vehicle technologies. How could this substantial 
increase in funding affect the development of other technologies, such 
as natural gas, hydrogen, or advanced internal combustion engines, 
which receive far less funding each year?
    Answer. Our overall goal should be a national policy related to 
light duty vehicles that is, on balance, technology neutral. The auto 
industry is committed to developing a suite of advance vehicle 
technologies, including electric drive (e.g. plug-in hybrid, extended 
range electric, battery electric, and fuel cell technologies); clean 
diesel; hydrogen internal combustion; flex fuel; and continued 
advancements in gasoline internal combustion engines.
    It would be impractical to require each individual policy measure 
to address the entire suite of advanced vehicle technologies. For 
example, individual tax measures or infrastructure programs might 
appropriately focus on a specific category of advanced technology 
vehicles, depending on the goals the measure seeks to achieve.
    The auto industry supports policies that encourage a portfolio 
approach to technology development. For example, setting performance 
standards rather than technology mandates allows automakers to explore 
numerous technology innovations and pathways, and to ultimately provide 
the public benefits sought at lower cost to consumers overall. 
Maintaining a balance in federal research dollar across all advanced 
vehicle technology options should also be a high priority.
    Question 11b. By promoting one technology so greatly, could we 
inadvertently disincentivize cheaper ways to reduce fuel consumption 
and greenhouse gas emissions, as well as longer-term options like fuel 
cells?
    Answer. Battery electric and fuel cell vehicles offer the most 
promise for helping to achieve the ambitious target of an 83 percent 
reduction of greenhouse gas emissions by 2050. For this reason, we 
believe the legislation should allow manufacturers, fuel providers, and 
communities the flexibility to invest in multiple electric drive 
pathways. Automakers support the inclusion of fuel cell vehicles and 
hydrogen infrastructure for eligibility in federal programs to 
accelerate the deployment of electric drive vehicles.

                NATIONAL VS. TARGETED DEPLOYMENT PROGRAM

    Question 12a. In your written testimony, you stated that, ``Opening 
up the grant program to a larger number of communities, with wide 
regional representation, would avoid limiting automakers' potential 
customer base for these vehicles and maximize the chances of success 
for our public investments overall--even if this means that individual 
communities would receive lower levels of total funding.'' How many 
communities do you believe would be appropriate for a broader 
deployment program?
    Answer. Rather than selecting an arbitrary number of communities to 
be targeted for electric vehicle deployment efforts, automakers believe 
that the objectives of the legislation would be best achieved by 
building on the success of the existing Department of Energy Clean 
Cities program as well as the transportation electrification efforts 
started through Recovery Act funding. These existing programs, like the 
provisions envisioned in the legislation, support greater electric 
vehicle deployment through cost-shared grants, technical support, and 
training to local communities.
    Question 12b. Given the massive budgetary constraints that Congress 
is facing, can you discuss the impacts that could result if this 
legislation is enacted, and then just a few communities receive funding 
to participate in it?
    Answer. As an industry, we have concerns about any approach that 
would overly limit investments to a small number of cities, 
particularly at such an early stage of electric vehicle deployment. 
Attempts to prejudge the market bring tremendous risks, and the problem 
is compounded if we are making just a few large bets. Selecting only a 
few communities as the focus of federally sponsored electric drive 
vehicle deployment efforts would risk limiting automakers' potential 
customer base for these vehicles.

      Responses of Kathryn Clay to Questions From Senator Cantwell

    Question 1. S. 3495 emphasizes the establishment of ``deployment 
communities'' that have a concentration of the necessary support 
infrastructure for electric vehicles. I understand you think this is 
not the best way to seed the market for these vehicles.
    Answer. The Senator's statement is correct.
    Question 2. The kinds of deployment communities supported in the 
bill are in many ways similar to--and building upon--the deployment 
plans of the automakers themselves. For example, Chevy Volt has 
announced they will deploy in Michigan, California, and Washington DC. 
Nissan has chosen Portland, Seattle, Phoenix, San Diego, and Nashville 
to roll out its all-electric vehicle the LEAF.
    Answer. The Senator's statement is correct.
    Question 3. Do you think the companies that are making these 
electric vehicles have it wrong? Should they not be taking this 
concentrated approach?
    Answer. Individual automakers have identified early markets for 
their electric drive vehicle models. These companies have chosen 
regional markets or cities to focus their first efforts for launching 
these vehicles. As automakers learn more about the potential customer 
base for these vehicles, and as new markets emerge, each company will 
modify their marketing and deployment efforts to emerging 
circumstances.
    At this early stage of electric vehicle deployment, automakers must 
remain highly flexible and responsive to the market. More real world 
learning is needed before any entity, public or private, will be able 
to identify which areas of the country will have the highest adoption 
rates of electric drive vehicles or the greatest needs for charging 
infrastructure investment.
    Question 4. If we do not adopt this plan based on establishing 
deployment communities, how can we support the deployment of electric 
vehicles in a way that is simultaneously fiscally responsible and moves 
them beyond early adopters?
    Answer. Rather than selecting an arbitrary number of communities to 
be targeted for electric vehicle deployment efforts, automakers believe 
that the objectives of the legislation would be best achieved by 
building on the success of the existing Department of Energy Clean 
Cities program as well as the transportation electrification efforts 
started through Recovery Act funding. These existing programs, like the 
provisions envisioned in the legislation, support greater electric 
vehicle deployment through cost-shared grants, technical support, and 
training to local communities.
                                 ______
                                 
    Responses of Brian P. Wynne to Questions From Senator Murkowski
                             Battery Bubble

    Question 1. According to some recent news reports, the United 
States may already be on the verge of producing far more advanced 
batteries than electric vehicles. Do you see any evidence of this 
happening? What are the likely consequences if too many batteries are 
produced? What can we do to ensure that there is no supply-demand gap 
for batteries?
    Answer. While there have been projections along those lines, there 
is also a large body of analysis finding that demand will match, and 
potentially outpace supply in the 2017 time frame. For instance, Oliver 
Hazimeh, the director and head of Global E-Mobility Practice for PRTM, 
a global management consulting firm, is projecting that demand for 
lithium-ion batteries will be four times as many lithium-ion batteries 
in 2020 (200GWh) as the announced production capacity (50GWh) of the 
industry.
    That announced supply of batteries (50 Gwh) for 2015 would serve 
1.5 million vehicles--including hybrids, plug-in hybrids and battery 
electric vehicles in the light medium and heavy duty segment. They can 
also be used for non-automotive energy storage applications.
    Federal policy is playing, and can continue to play, an important 
role in helping to build supply and encourage demand. Continuing 
support for research and development will speed reductions in cost and 
increases in performance of advanced batteries. Easing access to 
capital and establishing tax incentives has already resulted in 
increased investment in U. S. manufacturing of advanced batteries, 
components and vehicles and this success can be expanded with 
consistent federal policies. Federal deployment programs, such as Clean 
Cities and State Energy Program funds, as well as the Recovery Act's 
Transportation Electrification grants, are putting vehicles and 
infrastructure in place around the country. These programs and proposed 
regional deployment efforts will help to build markets and to build 
consumer acceptance of plug-in electric drive vehicles.

                      TARGETED DEPLOYMENT PROGRAM

    Question 2. A targeted deployment program could help deploy 
vehicles and infrastructure within communities, but it would do little 
to assist with long-distance driving. What do you think can and should 
be done to facilitate intercity road trips in electric vehicles?
    Answer. Electric drive vehicles come in multiple configurations--
hybrid, pure battery electric, plug-in hybrid and fuel cell. Each of 
these is optimized for different uses. Hybrid trucks, for instance, are 
already operating on interstate routes, as the electricity generated on 
board does not require additional infrastructure.
    With plug-in hybrids, the ability to use electricity and petroleum 
fueling infrastructure expands the range of the vehicle and provides 
flexibility in advance of ubiquitous local and interstate recharging 
locations.
    Residential and workplace charging can serve the majority of 
charging needs for plug-in hybrids and battery electric vehicles. 
Publicly accessible charging stations and charging options in 
commercial facilities (garages, shopping malls, etc.) will expand the 
electric range of vehicles, as well as expanding the vehicle options of 
consumers with varying driving needs.
    As the use and range of plug-in electric drive vehicles expands, 
infrastructure options will need to evolve as well. Collaborative 
efforts between infrastructure and power providers, city and regional 
governments and vehicle manufacturers are already underway. For 
instance, the EV Project, with the support of Recovery Act funds, is 
installing home and non-residential charging options in 13 cities and 
building charging corridors. Washington, Oregon, California, and 
British Columbia's public agencies and private entities are working 
together to build the Interstate 5 West Coast Green Highway, which will 
build a framework for electric vehicles and other alternative fuel 
vehicles along the entire 1,350 miles of the I-5 corridor.
    Efforts such as these will help track and meet the needs of plug-in 
electric drivers, establish interstate business models and standardize 
technology and billing options for consumers.
    Another key policy to facilitate longer intercity trips is to 
extend the expiring incentive for installation of alternative fuel 
vehicle refueling property and to ensure that it effectively recognizes 
the expenses associated with electricity recharging equipment and 
installation.

                           PACE OF DEPLOYMENT

    Question 3. Hybrid electric vehicles debuted a decade ago, are 
popular with consumers, and currently account for about three percent 
of the light duty vehicle market. Is it reasonable to expect that 
electric vehicles will deploy at a much faster rate?
    Answer. We and many industry analysts do expect plug-in electric 
drive to deploy at a faster rate based on the consumer interest in the 
vehicles and in oil alternatives, accelerated technology development, 
strong policy support and increasing emissions reduction requirements.
    A 2009 National Research Council report provided a conservative 
forecast of 13 million plug-in hybrids on the roads by 2030 and an 
optimistic one of 40 million vehicles. While these estimates were based 
on unrealistically high battery costs and unrealistically static 
gasoline costs, the range provides a snapshot of the potential of the 
industry.
    Long term projections are inherently uncertain, but it is clear 
that, with continued private sector advances and public support, the 
plug-in electric drive market can be accelerated. With growing consumer 
acceptance, and next-step policies that advance the technology and 
promote investment, the industry can achieve commercial scale 
penetration and mainstream acceptance in the near term. These steps are 
important to meet the President's goal of 1 million plug-in electric 
drive vehicles by 2015.

                           BATTERY TECHNOLOGY

    Question 4. One of the biggest hurdles to the development of 
electric vehicles is the cost of their batteries, which adds greatly to 
the price of the vehicle itself. Can you share your views on how 
quickly batteries will advance over the next decade, and what that will 
mean for their cost?
    Answer. Battery performance has been increasing rapidly while costs 
have been declining. Substantial private and public sector investment 
(including the Recovery and the Department of Energy's ongoing research 
and development programs) are accelerating both of these trends, while 
building domestic capacity in advanced batteries and components--which 
will also reinforce downward cost pressures. Two years ago, the 
benchmark for battery costs was generally quoted at $1,000kWh with the 
DOE benchmark goal set at $300/kWh. Substantial progress has already 
been made and that goal appears to be within reach for some 
manufacturers. Deutsche Bank estimates the benchmark price at $650 per 
kWh with indicators of $450 kWh cost in 2011-2012. A DOE report to be 
released this week is expected to project that stimulus funding could 
bring down battery costs from $33,000 for a battery with a 100+-mile 
range to $16,000 by the end of 2013 and $10,000 by the end of 2015.

                              COLD WEATHER

    Question 5. According to news reports, the BMW Mini-E loses quite a 
bit of battery capacity in cold temperatures, which in turn reduces its 
range. Can you provide an update on efforts to overcome the 
difficulties that some electric vehicles with certain battery 
chemistries may encounter in cold climates, particularly in an Arctic 
state like Alaska?
    Answer. The efficiency of all vehicles is affected by ambient 
temperatures. A gasoline engine will get fewer miles to the gallon with 
the air conditioner running.
    Extreme cold can impact performance of battery electric vehicles, 
specifically at start up, but the impact depends on configurations 
(battery electric versus plug-in hybrid), battery chemistries and cell-
structures, overall system design and the different manufacturers' 
systems for maintaining the right internal temperature for optimal 
performance.
    Essentially, at start up, cold batteries, which do not generate 
initial heat compared to traditional internal combustion engines, are 
in a lower state of capacity before ideal operating temperatures are 
reached during operation. Range can be affected if extreme temperatures 
prevent the system from reaching optimal temperature during operation.
    Manufacturers are putting a number of vehicle-and chemistry-
specific options in their cars to maintain optimal operating 
temperature. For example, the Nissan Leaf at launch will include an 
option for pre-warming the battery to an ideal operating temperature 
before the driver resumes operation. Other battery electric vehicle 
manufacturers are looking at other pre-warming strategies, such as 
small, fuel-burning heaters, to provide the battery with initial heat 
from a cold start.
    In addition, battery manufacturers, with the National Renewable 
Energy Laboratory, are researching new battery chemistries and cell 
structures to limit the effects of cold temperatures on battery 
operation.

                           CHARGING STATIONS

    Question 6. How many charging stations do you believe will need to 
be installed for every electric vehicle put on the road?
    Answer. The infrastructure needs will vary by configurations 
(battery electric vehicles and plug-in hybrid electric), the size of 
the batteries (or electric range) and total range of the vehicles. For 
instance, for the Mitsubishi iMiEV, the company is planning for one 
home charging option for each vehicle, one workplace Electrical Vehicle 
Supply Equipment (EVSE) for every two vehicles and one DC Quickcharger 
for every 10 vehicles. For vehicles with a range extender or an 
alternative propulsion system, one home recharging option would be the 
primary need.

                             CHARGING TIMES

    Question 7. Right now, most gas-powered vehicles can be fueled in 
less than 10 minutes, and then driven for hundreds of miles. A drawback 
for electric vehicles is that they can take hours to fully recharge. 
Even quick charging, which reduces battery life, can take at least 20 
minutes. Can you discuss any changes to charging time that you see over 
the next several years?
    Answer. Deployment of diverse charging stations options, including 
home, workplace and publicly accessible or commercial charging stations 
will advance the electrification of the transportation sector. Most 
consumer vehicles are parked for approximately 80 percent of the day. 
The vast majority of charging for plug-in electric drive vehicles 
initially will be at home, with workplace charging the second most 
frequent recharging opportunity. In both of these places, where the 
vehicle is commonly parked for several hours at a time, level 1 (120 
volt, regular household outlet) or level 2 (240 volt, like a dryer 
outlet) will provide timely and convenient recharging for most drivers.
    ``Quick'' or ``Fast charging'' (480 volts) is most likely to be 
employed in public or commercial recharging stations. A fast charge can 
take up to 15 minutes for a full charge--depending on the size of the 
battery or how ``empty `` it is. However, it is important to note that 
a full charge will not always be needed. If the battery is not fully 
depleted, or if the driver does not need full range to get to their 
home or other destination, then recharge time is even shorter.
    Meanwhile, both battery and recharging technologies are advancing 
rapidly. Public and private research and investment are yielding 
results in reducing charge times while extending battery life. 
Recently, GE announced its WattStation public charging unit that will 
cut level 2 charging time in half. Last month, another company, JFE 
Engineering, announced a ``super fast'' charging system that can 
achieve a 50 percent charge in three minutes and 70 percent in 5 
minutes.
    In addition to technology advances that will reduce charging times, 
the industry is also developing diverse business models that will 
provide charging outside of dedicated service stations (parking 
garages, shopping malls, hotels) allowing consumers to recharge in the 
course of other activities.
    The technology and the business models are maturing quickly but we 
are still at the beginning and expect substantial advances in reducing 
recharge time, as well as innovative options for meeting consumers' 
diverse recharging needs.

                         TAX CREDITS VS. GRANTS

    Question 8. This bill contains a variety of grant funding, and it 
is my understanding that tax provisions could be added to it during 
floor debate. Do you believe that one of those forms of support is more 
appropriate or more relevant to the advancement of electric vehicles? 
Is it important to maintain a mix between tax credits and federal 
grants?
    Answer. Federal policy support, in both tax incentives and grants 
is important in helping electric drive achieve national penetration in 
the near and longer term. The technology has the potential to reduce 
dependence on oil, cut emissions of pollutants and increase our energy 
security. To achieve these large scale goals, we need a comprehensive 
plan to achieve a diverse national fleet of electric drive vehicles. 
Tax incentives promote investments in vehicles, infrastructure, 
manufacturing and research and development. Grant programs also support 
investment in the industry and in the collaborative efforts that will 
speed deployment of vehicles and infrastructure.
    EDTA supports robust federal investment in the grant programs that 
advance electric drive research, manufacturing and deployment. We also 
support national tax incentives, including such as the plug-in electric 
drive vehicles credit and the advanced energy investment credit. We 
also support re-establishing incentives for medium and heavy duty 
electric drive vehicles and extending the recharging infrastructure tax 
credits to ensure that they fully recognize the costs associated with 
electric refueling property and installation.

                         TECHNOLOGY NEUTRALITY

    Question 9. As introduced, S. 3495 would authorize nearly $6 
billion for electric vehicle technologies.

          a. How could this substantial increase in funding affect the 
        development of other technologies, such as natural gas, 
        hydrogen, or advanced internal combustion engines, which 
        receive far less funding each year?
          b. By promoting one technology so greatly, could we 
        inadvertently disincent cheaper ways to reduce fuel consumption 
        and greenhouse gas emissions, as well as longer-term options 
        like fuel cells?

    Answer. We agree with the findings of the recent National Research 
Council that federal policies must also advance longer term as well as 
immediate goals, including deployment of fuel cell vehicles and 
infrastructure and advances in emerging energy storage options that the 
private sector cannot support alone.
    Recognizing that resources are finite and that a diverse portfolio 
of technologies will be needed in our transportation future, investing 
in electric drive today is an essential part of the solution to oil 
dependence. We need to build on our successes and take the next steps 
with a comprehensive effort to launch this transformational 
transportation technology on a national scale.
                                 ______
                                 
     Responses of Alan T. Crane to Questions From Senator Murkowski

                           PACE OF DEPLOYMENT

    Question 1. According a press release accompanying the National 
Research Council's report, ``the maximum number of plug-in electric 
vehicles that could be on the road by 2030 is 40 million, assuming 
rapid technological progress in the field, increased government 
support, and consumer acceptance of these vehicles. However, factors 
such as high cost, limited availability of places to plug in, and 
market competition suggest that 13 million is a more realistic 
number.'' What do you think it would take to get 100 million PHEVs on 
the road by 2030? Is there any chance of that happening?
    Answer. The committee that prepared the PHEV report believes that 
getting 100 million PHEVs on the road by 2030 (1/3 of the fleet) would 
require unprecedented rates of technology adoption and probably 
extraordinary Federal intervention in the market. The committee 
estimated the maximum practical penetration rate based on past 
experiences with new technologies, including hybrid electric vehicles 
(HEVs). Typically a new vehicle technology is introduced in just a few 
models, and as costs are reduced and performance improved, it spreads 
to other types of vehicles and manufacturers. HEVs were first 
introduced in the United States in 1999, and commercialization was 
accelerated by government support. After a decade, HEVs accounted for a 
few percent of new sales, and cumulative sales were about 1.6 million, 
less than 1 percent of the total fleet. HEV growth could have been 
faster, but most consumers didn't find the additional cost (even with 
government subsidies) justified by the fuel savings.
    The NRC penetration rate for PHEVs was much more aggressive than 
experienced by HEVs, reaching 8 million in 12 years and 40 million in 
20 despite the much higher costs and modest fuel savings of PHEVs 
relative to HEVs, and the driver behavior modifications that will be 
required. More than half of U.S. car sales from 2020 to 2030 would have 
to be PHEVs to reach 100 million. Even if extremely ambitious technical 
goals are met, PHEVs are unlikely to be cost-competitive much before 
2025. Many drivers will be unable or unwilling to plug their vehicles 
regularly or don't have driving patterns that make sense for PHEVs. The 
committee concluded that 40 million PHEVs is an upper bound for 2030.

                           FUEL CELL VEHICLES

    Question 2. While the focus of this hearing is a bill to promote 
electric vehicles, can you provide the Committee with a general update 
on the status of fuel cell vehicles, barriers to their deployment, and 
when commercial production may begin in the United States?
    Answer. Substantial progress has been made on fuel cell vehicle 
technology since the NRC report on the subject was completed in 2008. 
As noted in the NRC's recent review of the FreedomCar program, 
projected fuel cell system cost at 500,000 units/year has decreased 
from about $107/kiloWatt in 2008 to $60-70/kW now, a significant 
reduction in 2 years. Progress is on schedule to meet the target of 
$30/kW in 2015. In part this decrease is the result of continued 
decreases in platinum catalyst loading. Some companies now project that 
hydrogen fuel cell vehicles (HFCVs) will need less platinum than in the 
catalytic converters of conventional vehicles. On-road durability has 
increased significantly from 1250 hours in 2008 to about 2000 hours 
now. The 2015 target of 5000 hours appears achievable. In laboratory 
tests, some fuel cells have reached 7200 hours.
    It is also significant that all major vehicle manufacturers have 
recently announced that they can achieve driving ranges of 300 to 400+ 
miles using compressed gas storage. Toyota and Kia have both 
demonstrated ranges in excess of 425 miles and system efficiencies well 
above 50%, for example.
    Companies in the United States, Europe, and Asia are planning 
aggressive commercialization of HFCVs. As presented at the June 3, 2010 
meeting of the Hydrogen Technical Advisory Committee (http://
www.hydrogen.energy.gov/advisory_htac.html):

   GM plans to introduce HFCVs in 2015 with a very compact 124 
        kW fuel cell system that meets all commercial cost and 
        performance objectives;
   The ``H2-Mobility'' consortium, a European initiative, plans 
        to launch HFCVs and the accompanying infrastructure in Germany 
        by 2015; and
   The Japanese government-corporate joint initiative plans to 
        launch HFCVs in 2015. All the leading automakers and energy 
        companies in Japan have committed to the Japan Hydrogen & Fuel 
        Cell Demonstration Project (JHFC) goals.

    Despite the impressive progress, fuel cell vehicles face several 
daunting barriers. Costs of the fuel cells and on-board storage of 
hydrogen must be brought down further through improvements in 
technology. The hydrogen infrastructure must be built simultaneously 
with the introduction of HFCVs. Meeting these goals will be difficult 
but not impossible; R&D is proceeding well, and the Department of 
Energy has developed a strategy to deploy hydrogen fueling stations in 
a pattern consistent with the growth of hydrogen demand. Initially, 
HFCVs will be much too expensive for most buyers, and hydrogen fuel 
will be hard to find. Mass production will bring costs down sharply, 
but significant, though declining, subsidies will be required to reach 
competitiveness and to build the hydrogen infrastructure before there 
is much market for it. The committee estimated these subsidies at about 
$50 billion total. While that is less than is being spent on other 
energy options, it will be critical for industry to have confidence 
that the funds will be available for the duration of the transition.

                           BATTERY TECHNOLOGY

    Question 3. In your written testimony, you state that, ``While the 
committee's estimates of future costs are higher than some (but not 
all) others, that may be because the committee assumed that durability 
and safety goals had to be met before cost goals.'' Can you expand on 
this statement?
    Answer. The costs in the NRC report are based on the battery pack 
which includes the battery cells, the casing, and the electronic and 
cooling systems that are currently required to assure safety and 
durability. The committee was told by auto makers that safety had to be 
assured to very high standards in order for them to market PHEVs and 
that very high levels of durability were required to meet their 
warranty positions. Cheaper batteries undoubtedly can be made, but then 
they might have to be replaced several times over the lifetime of the 
vehicle, a cost that wouldn't appear at first. The committee assumed 
that the electronic monitoring and cooling systems currently needed to 
assure safety and durability would be retained in the future. These 
contribute significantly to battery pack costs and are based on mature 
technology that is not expected to drop greatly in cost. Some 
projections assume that these systems will be deleted, but the 
committee was unconvinced that that could be done without jeopardizing 
durability. The committee did not attempt to predict breakthroughs in 
battery cell technology, which might lead to significant reductions in 
battery cost and in more marked reductions in the requirement for 
electronic monitoring and cooling requirements and thus, further 
reductions in cost. Although the report's assumptions in this area may 
seem to some to be conservative, the current flurry of automobile 
safety and recall issues suggest caution in making bolder technology 
projections that could affect safety.

                           BATTERY TECHNOLOGY

    Question 4. One of the biggest hurdles to the development of 
electric vehicles is the cost of their batteries, which adds greatly to 
the price of the vehicle itself. Can you share your views on how 
quickly batteries will advance over the next decade, and what that will 
mean for their cost?
    Answer. The cost of a battery pack for any specified range for a 
particular vehicle is a function of the cell cost and associated 
equipment as noted in the previous response. The committee estimated 
that a battery pack for a PHEV-40 (40 mile all-electric range) would 
cost $10,000 to $14,000 in 2010 and for a PHEV-10 would cost $2,500 to 
$3,300. These costs are for cells ordered several years ago for 
installation in vehicles manufactured in 2010 and 2011. They are 
unlikely to survive 10 years of operation. As noted in the previous 
response, the committee expects improving durability to take precedence 
over reducing costs. These battery packs are for small to mid-size 
cars. Many vehicles, such as mid-size or large SUVs, would require much 
larger and more expensive battery packs.
    Cost reductions will come from several sources, the most important 
of which is the technology of the cell itself. In particular, as the 
technology improves, more energy may be usefully extracted from the 
cell without compromising durability. The next most important sources 
are likely to be improved manufacturing processes and yields. Cost 
reductions from increasing scale of manufacture will be small. Unlike 
fuel cells, lithium-ion batteries are manufactured by the billions per 
year in large and sophisticated facilities. The manufacturing processes 
for cells for automobile application are not very different from many 
cell lines already being produced.
    Cost reductions of three -to four-fold over the next several years, 
as projected by some people, are not likely without inherently 
unpredictable major battery breakthroughs. The committee estimated that 
battery pack costs would decline by about 40 percent by 2020 based on 
discussions with representatives of cell manufacturers, automobile 
manufacturers, and battery pack assemblers. The committee also observed 
that the cost of Ni-metal hydride batteries has declined only slightly 
as production ramped up for use in HEVs over the last decade. It is 
important to note that the committee's estimates are for full, 
unsubsidized battery-pack costs. Companies may sell batteries and 
vehicles at or even below costs to gain market share, or governments 
may subsidize the costs of building and/or operating manufacturing 
facilities. Thus announced costs have to be examined carefully to 
determine if they are real or have simply shifted some of the costs to 
other payers.

                             CHARGING TIMES

    Question 5. Right now, most gas-powered vehicles can be fueled in 
less than 10 minutes, and then drive for hundreds of miles. A drawback 
for electric vehicles is that they take hours to fully recharge. Even 
quick charging, which reduces battery life, can take at least 20 
minutes. Can you discuss any changes to charging time that you see over 
the next several years?
    Answer. Rapid charging will be important for all-electric vehicles 
but less so for plug-in hybrids. We assumed that most PHEVs would be 
plugged in at home overnight. Even a large SUV with a 40 mile battery 
pack can be charged in less than 4 hours on a 220 volt line. Therefore 
we did not study the effect of rapid charging rate on battery 
durability. However, I might note that, as you say, very rapid charging 
may well reduce battery life. It would generate a lot of heat inside 
the battery pack (possibly at a rate of over a kilowatt) which must be 
removed to maintain safe temperatures. Vehicle manufacturers may 
incorporate charging limiters in their battery packs until they are 
sure that any accelerated deterioration is minor. Rapid charging also 
might place heavy burdens on the infrastructure to supply the 
electricity if electric vehicles become common for long distance 
travel; a busy turnpike charging station could easily see demand at the 
multi-megawatt level. These and other important issues will be answered 
only with considerable experience with battery vehicles on the road.

                           PORTFOLIO APPROACH

    Question 6. In your written testimony, you conclude by noting that 
``A portfolio approach to research, development, demonstration, and 
perhaps, market transition support is essential.'' Can you expand on 
the types of technologies and policies that you believe should be 
included in a truly balanced portfolio?
    Answer. The PHEV report and other recent NRC studies (America's 
Energy Future, FreedomCar) have shown the importance of a portfolio 
approach to meeting goals for reducing oil dependency and greenhouse 
gas emissions. We simply don't know at this point which options will be 
prove most satisfactory, especially in the long term. Focusing on one 
or two could easily produce suboptimum results. The portfolio should 
include options that will be available in the near and long term.
    Important near term technologies include improved efficiency of 
internal combustion engine vehicles, hybrid drive trains, low carbon 
biofuels, and natural gas as a transition fuel. In the longer term, 
electric drive vehicles such as plug-in hybrids, all-electric vehicles, 
and fuel cells could yield large reductions in oil use and GHG 
emissions. Because of the longer time frames required to develop and 
commercialize electric drive train technologies (batteries and fuel 
cells), it is important to pursue near term strategies while developing 
electric vehicle technologies. The largest reductions are most likely 
to be achieved when these approaches are used together.
    In the past 20 years, US alternative fuel policy has been 
characterized by a ``fuel du jour'' syndrome, which has led to ``boom 
and bust'' cycles of support for one technology after another. All long 
term options face challenges and uncertainties. Maintaining strong 
consistent support for a variety of options is crucial to nurturing 
their development.

                         TECHNOLOGY NEUTRALITY

    Question 7a. As introduced, S. 3495 would authorize nearly $6 
billion for electric vehicle technologies. How could this substantial 
increase in funding affect the development of other technologies, such 
as natural gas, hydrogen, or more efficient conventional vehicles, 
which receive far less funding each year?
    Answer. The committee did not study how emphasis on one technology 
would affect development of others. However, I can make some general 
observations based on the NRC's recent review of the FreedomCar program 
and other reports.
    Emphasizing any one technology is likely to starve others of 
funding. Even if R&D funding is maintained, money is not the only 
factor limiting development. Companies may not be able to hire all the 
engineers, designers, researchers, managers, and other skilled labor 
they would need to pursue all technologies at the maximum rate. 
Therefore, to some extent, picking winners also implies picking losers.
    Question 7b. By promoting one technology so greatly, could we 
inadvertently disincentivize the development of cheaper ways to reduce 
fuel consumption and greenhouse gas emissions, such as advanced 
internal combustion engines that achieve significant increases in fuel 
economy?
    Answer. In the near- and mid-term (i.e. before 2030), advanced fuel 
efficiency of conventional vehicles, biofuels, and natural gas are 
likely to be more effective in reducing oil consumption and carbon 
emissions than either batteries or fuel cells although their ultimate 
potential is less. None of these options will be cost-effective while 
gasoline prices are at current levels, but it seems logical to extract 
as much benefit as possible from the lower hanging fruits. However, the 
current CAFE standards are forcing manufacturers to rapidly increase 
fuel economy, and ethanol promotional policies are close to maximizing 
biofuel production until cellulosic ethanol and other advanced 
technologies are ready. Therefore I wouldn't say that the battery 
program disincentivizes the nearer-term technologies, but it may for 
fuel cells.
    Question 7c. By promoting one technology much more than others, do 
we risk discouraging the development of fuel cell and other alternative 
technology vehicles?
    Answer. As I noted in my oral testimony, it is by no means certain 
that batteries will become the technology of choice for a large 
fraction of the light duty vehicle fleet. A balanced program is vital 
at least until we find out whether the costs and other issues 
associated with batteries, fuel cells, cellulosic ethanol, and other 
technologies will prove acceptable. Furthermore, as discussed in the 
fuel cell report and in my response to question 2 above, 
commercializing HFCVs will require steadfast government support to 
assure industry that their investments won't get the rug pulled out 
from under them. Fuel cells need several more years of R&D before the 
much more costly commercialization phase could start, but companies may 
be concerned that government support for a second major initiative will 
not be there when they need it. That could discourage private 
investment in the R&D that is still needed.
    Thank you for this opportunity to expand on my testimony. I would 
be happy to supply copies of related NRC reports:

   Review of the Research Program of the FreedomCAR and Fuel 
        Partnership: Third Report (2010);
   America's Energy Future: Technology and Transformation 
        (2009);
   Assessment of Technologies for Improving Light-Duty Vehicle 
        Fuel Economy.

     Responses of Alan T. Crane to Questions From Senator Sessions

    Question 1. Since ``cost reductions are not very likely without 
breakthrough in battery technology,'' how do you expect to get 40 
million of these cars on the road by 2030 when the technology is not 
there to make it plausible?
    Answer. The committee projects that battery costs will decline by 
over 40 percent by 2030. This is a significant improvement, but it is 
unlikely to be enough by itself that 40 million PHEVs will be on the 
road by 2030. Therefore, unless unpredictable breakthroughs 
dramatically lower the cost, substantial subsides will be necessary to 
achieve high penetration rates.
    Question 2. If ``policy intervention and/or financial assistance 
for buyers from government'' is needed, how much will these processes 
cost the tax payers?
    Answer. Subsidies could be from the government in the form of 
assistance to battery and vehicle manufacturers, or to buyers of the 
vehicles. In the early years, subsidies might also come from 
manufacturers selling at below normal markup or even below cost in 
order to promote sales and gain market share. The committee did not 
investigate how the subsidies might be supplied. It merely calculated 
the total that would be necessary. For PHEV-40s, over $400 billion 
would be required before break-even is reached under the committee's 
optimistic technology projection. However, if DOE's goals are reached 
by 2020, the total drops to $24 billion\1\.
---------------------------------------------------------------------------
    \1\ The committee did not expect that the DOE goals could be met 
without real breakthroughs in battery technology, which are inherently 
unpredictable. Even if they do occur, commercialization will require 
years of testing and refinement, and more years to set up mass 
manufacturing facilities and reach significant penetration into the 
fleet.
---------------------------------------------------------------------------
    Question 3. Under current conditions, how much would it cost to 
produce a plug-in hybrid car that is practical for public use?
    Answer. The Chevrolet Volt (PHEV-40), which will be introduced in a 
few months, will be practical for public use. The main problem is the 
cost. GM has announced that the Volt will list at $41,000. With all 
available options, the list price is $44,600. This is price, not cost, 
and may include some manufacturer subsidies for the batteries and 
vehicles, but not the tax credit for the buyer. Starting prices for the 
equivalent Chevrolet Cruze will range from $16,275 to $21,975, so the 
price increment for the Volt is on the order of $20,000. The committee 
estimated the current incremental cost, relative to an equivalent non-
hybrid vehicle, at $14,000 to $18,000 for a PHEV-40, which is 
reasonably consistent with the price increment for the Volt. The 
committee's estimate for the PHEV-10 cost increment was $5,300 to 
$6,300.
    Question 4. In your opinion, does the federal government need to 
provide subsidies in order to produce and market the 700,000 plug-in 
hybrid cars called for in the legislation? If so, what form of subsidy 
would be used? If it is financial assistance, what would the amount of 
the subsidy be?
    Answer a. Yes. In order to reach beyond the early adopters and 
electric vehicle enthusiasts (and 700,000 is very likely well beyond 
these niche markets), PHEVs must offer a significant gasoline saving to 
offset their higher price. At current gasoline prices, unless 
subsidized few if any of the first generation of PHEVs will provide net 
benefits over their lifetimes to their owners. Manufacturers may 
provide some subsidies for early production vehicles, but are unlikely 
to be willing to continue as production rises. Most of the 
subsidization will have to be from the government, which has the 
additional incentives of reducing oil consumption and greenhouse gas 
emissions. Encouraging battery development and PHEV production is 
likely to drive down costs, and eventually the government's investment 
may prove worthwhile.
    Answer b. As noted above, this study did not examine the policies 
necessary to ensure the penetration of PHEVs into the market, just the 
magnitude of the effort required.
    Answer c. The committee's optimistic penetration projection reaches 
700,000 PHEVs in 2017. If all are PHEV-40s, they would cost about $11 
billion more than equivalent conventional vehicles\2\. Assuming the 
batteries last for 100,000 miles, a PHEV-40 might save about $4000 in 
fuel costs\3\. Therefore the net incremental cost of 700,000 PHEV-40s 
would be about $8 billion. At $7,500/vehicle, the Federal tax credit 
would amount to $5.25 billion. If the DOE goals for battery costs are 
met, the required subsidy would be much lower.
---------------------------------------------------------------------------
    \2\ The committee's optimistic cost increment in 2015 is $11,200. 
Using that as an average for vehicles produced between 2010 and 2017, 
and including a markup of 40% for retail prices, the total additional 
cost for 700,000 PHEV-40s comes to $11 billion.
    \3\ EPA's mileage estimates for the Cruze are not yet available (it 
will be introduced with the Volt as a 2011 model), but GM says a high 
efficiency version will be available that gets 40 mpg on the highway. 
Assuming a city/highway average of 36 mpg, this vehicle would use about 
2780 gallons in 100,000 miles. PHEV-40s are projected to drive 45% on 
gasoline and 55% on electricity, so in 100,000 miles it would use about 
1250 gallons, saving 1530 gallons. At an average of $3.30/gallon, this 
saves $5050. At 200 Wh/mile, electricity consumption would be 11,000 
kWh, which at 10.4 cents would cost $1140, so the net fuel savings 
would be $3910. The fleet of 700,000 would save $2.7 billion in fuel 
over their lifetimes. No discount rate has been applied to reflect the 
present value of future savings at the time the vehicle is purchased.
---------------------------------------------------------------------------
    Question 5. Calculating total cost, including subsidy along with 
fuel savings, compare the life cycle cost of a plug-in vehicle to a 
conventional gas/diesel car.
    Answer. The committee's analysis did not directly perform this 
analysis, but we do have some additional information that was not in 
the report and has not been subject to National Academy review. The 
results, of course, depend heavily on assumptions, but for the capital 
and fuel costs in the NRC PHEV report:

   Even with optimistic technology development, the PHEV-40 is 
        more expensive than a conventional gasoline vehicle through 
        2030;
   With a subsidy of $7500, the PHEV-40 could become 
        competitive by 2017;
   If DOE's goals are met by 2020, the PHEV-40 becomes 
        competitive in 2020 without subsidy and 2013 with the $7500 tax 
        credit;
   The PHEV-10 could become competitive in about 2025 without 
        subsidies and in 2010 with the $7500 subsidy;
   Under the committee's probable technology development, the 
        PHEV-40 never becomes competitive even with the subsidy. The 
        PHEV-10 is competitive in 2010 with the subsidy, but does not 
        reach competitiveness by 2030 without it.

    These comparisons are shown in the attached figures. It should also 
be noted that subsidies do not alter the underlying costs. They just 
assign them to different payers.
                                 ______
                                 
    [Responses to the following questions were not received at 
the time the hearing went to press:]

          Questions for David Friedman From Senator Murkowski

                             BATTERY BUBBLE

    Question 1. According to some recent news reports, the United 
States may already be on the verge of producing far more advanced 
batteries than electric vehicles. Do you see any evidence of this 
happening? What are the likely consequences if too many batteries are 
produced? What can we do to ensure that there is no supply-demand gap 
for batteries?

                      TARGETED DEPLOYMENT PROGRAM

    Question 2. If $500 million is awarded to each community selected 
for the program established by Section 106 of this bill, what sort of 
impact will that funding have? How many electric vehicles and charging 
stations should we expect to be deployed?

                      TARGETED DEPLOYMENT PROGRAM

    Question 3. A targeted deployment program could help deploy 
vehicles and infrastructure within communities, but it would do little 
to assist with long-distance driving. What do you think can and should 
be done to facilitate intercity road trips in electric vehicles?

                           PACE OF DEPLOYMENT

    Question 4. Hybrid electric vehicles debuted a decade ago, are 
popular with consumers, and currently account for about three percent 
of the light duty vehicle market. Is it reasonable to expect that 
electric vehicles will deploy at a much faster rate?

                           BATTERY TECHNOLOGY

    Question 5. One of the biggest hurdles to the development of 
electric vehicles is the cost of their batteries, which adds greatly to 
the price of the vehicle itself. Can you share your views on how 
quickly batteries will advance over the next decade, and what that will 
mean for their cost?

                              COLD WEATHER

    Question 6. According to news reports, the BMW Mini-E loses quite a 
bit of battery capacity in cold temperatures, which in turn reduces its 
range. Can you provide an update on efforts to overcome the 
difficulties that some electric vehicles with certain battery 
chemistries may encounter in cold climates, particularly in an Arctic 
state like Alaska?

                         TAX CREDITS VS. GRANTS

    Question 7. This bill contains a variety of grant funding, and it 
is my understanding that tax provisions could be added to it during 
floor debate. Do you believe that one of those forms of support is more 
appropriate and more relevant to the advancement of electric vehicles? 
Is it important to maintain a mix between tax credits and federal 
grants?

                           CHARGING STATIONS

    Question 8. How many charging stations do you believe will need to 
be installed for every electric vehicle put on the road?

                             CHARGING TIMES

    Question 9. Right now, most gas-powered vehicles can be fueled in 
less than 10 minutes, and then drive for hundreds of miles. A drawback 
for electric vehicles is that they take hours to fully recharge. Even 
quick charging, which can reduce battery life, can take 20 minutes. Can 
you discuss any changes to charging time that you see over the next 
several years?


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